Radha and Krishna’s Journey: Forming an LLP the Smart Way
Scene: A cozy café in Lower Parel. Radha and Krishna have decided to run their new design studio as a Limited Liability Partnership instead of a sole proprietorship. They’ve invited Meera, their chartered accountant, to walk them through the process
Radha (excited): Krishna, I ran the numbers. An LLP gives us personal liability protection and lower compliance than a Pvt Ltd. Let’s go for it.
Krishna (nodding): Agreed. But I have zero idea how to actually set one up. Meera, thanks for joining—will you guide us?
Meera (smiling): Of course. Forming an LLP in India involves five main steps. By the end of our chat, you’ll know exactly what to do.
1. Choosing Partners and LLP Name
Meera: First, decide who your partners are. An LLP needs minimum two partners—both of you qualify. Then pick a unique name—no clashes with existing LLPs or companies. You can check name availability on the Ministry of Corporate Affairs (MCA) portal.
Radha: We brainstormed “RadKri Designs” and “Urban Canvas.” How do we lock in the name?
Meera: File an LLP Name Reservation (Form 1) on MCA. Once approved, it’s valid for 3 months. Cost is nominal—around ₹200 in government fees.
2. Obtaining Digital Signatures and DIN
Krishna: I heard we need digital signatures. Why?
Meera: All forms are filed online, so every partner and designated partner needs a Digital Signature Certificate (DSC). It ensures authenticity. Cost for each DSC is roughly ₹1,000 for one year.
Meera (cont’d): Next, apply for Designated Partner Identification Number (DPIN) or Director Identification Number (DIN) for each designated partner by filing Form 3. You pay another small fee per partner.
3. Drafting the LLP Agreement
Radha: What about the agreement?
Meera: Critical. The LLP Agreement defines profit share, voting rights, decision-making, admission/exit of partners, and dispute resolution. Though MCA doesn’t enforce a template, you should hire a CA or lawyer to draft it professionally.
Cost: ~₹5,000–₹10,000 for a standard agreement, depending on complexity.
4. Filing Incorporation Forms
Meera: Now with DSC, DPIN, and the reserved name, you file Form 2 (Incorporation) along with the LLP Agreement and proof of registered office (utility bill + rent agreement).
MCA processes it in 7–10 days if documents are in order.
Krishna: What’s the total government fee?
Meera: Based on your LLP’s capital contribution:
- Up to ₹1 lakh: ~₹500
- ₹1 lakh–₹10 lakhs: ~₹2,000
- Use the MCA fee calculator for exact numbers.
5. Post-Incorporation Compliance
Radha: Once we get the Certificate of Incorporation, are we done?
Meera: Almost. Within 30 days, you must:
- File Form 4 to appoint/designate partners (if not done earlier).
- File Form 3 if any partner details change.
- File an LLP Agreement (Form 3) if it wasn’t uploaded at incorporation.
After that, every year you file: - Form 11 (Annual Return) by 30 May.
- Form 8 (Statement of Accounts & Solvency) by 30 October.
| Task | Cost Estimate | Timeline |
| Name Reservation (Form 1) | 200 | 1-2 days |
| DSC per partner | 1000 | 1-2 days |
| DPIN/DIN (Form 3) | 500-1000 | 1-2 days |
| Drafting LLP Agreement | 5000-10000 | 3-5 days |
| Incorporation | 500-2000 | 7-10 days |
| Annual Compliance | 1000-2000/year | rolling annually |
Krishna (relieved): That roadmap makes it feel doable.
Radha (smiling): And we know the pitfalls: name conflict, weak agreement, missed filings.
Meera: Exactly. An LLP suits you if you want low compliance and limited liability. If your long-term plan is to raise equity or go public, you might later convert to a Private Limited Company.
Radha: Thanks, Meera. We’ll get started today—Form 1 first!
Meera: Anytime. And remember, for CA services to draft your agreement or manage filings, just ping me or my firm. We help startups all over India, not just in Mumbai.