How to Start a Limited Liability Company

How to Setup LLC

A limited liability partnership (LLP) is an agreement in which some or all partners have limited liability on the running and affairs of a company. In other words, one partner can not be held responsible for another ones negligence or misconduct. This is a major difference from that of a limited partnership.

The limited liability of partners can be compared to the limited liability of the shareholders of a corporation.

Recently a law permitting (LLP) has been enacted by the Parliament of India. It provides the advantages of limited liability of a company but at the same time enables members have the reach to organize their internal administration with the help of an agreement.

The bill proposes that (LLP) would serve as a legal entity and corporate separate from its partners. It will have perpetual succession and will be liable wholly over its assets. However the liability of the partners would be restricted to their agreed contribution in the agreement.

Other Salient features of the LLP Act of 2008/2009/2010

  • The benefit of LLP is in no way restricted to certain types of professionals.
    Any enterprise which meets the requirements of the Act can avail it.
  • No partner should be held responsible for the wrongdoing of another partner’s faulty decisions or misconduct.
  • LLP will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLP’s. Unlike an ordinary partnership firm, there would be no upper limit on number of partners in an LLP.
  • An LLP needs to maintain annual accounts. The accounts must reflect true and unbiased view of its affairs. Like all other entities in India, taxation of LLP’s should be addressed in the Income Tax Act, 1961.
  • The bill provides provisions for corporate actions like amalgamations, mergers etc.
  • Provisions are there for stopping of operations and dissolutions of LLPs.

Choose your LLC name According to its Availability

  • Your Limited Liability Company (LLC) needs to have a business name. The term “LLC,”  “Limited Liability Co.,” has to be included in the business name.
  • Check the availability of your LLC’s chosen business name. If similar names exist you need to come out with another names

Registration of LLC

  • Create and sign an LLC Operating Agreement as well as write your LLC’s Articles of Organization.
  • File your LLC’s Articles of Organization with the Secretary of State office in your state.
  • Obtain business licenses and permits for your LLC according to government rules.

6 thoughts on “How to Start a Limited Liability Company

  1. Bijith Reply

    I would like to start a small scale industry in kerala, based on rubber.Actually i dont have much idea about such a project ,I need your valuable guidence regarding..
    1. What product to make?
    2. Can i start with in Rs.10 lakhs?
    3. Can get any govt help for this project?
    4. What are the initial steps ?

    With greate expectations

    Yours faithfully

    Bijith RC

    • Scott Wilson Reply

      Mr. Bijith,
      There are many products which you can produce and earn a handsome amount of money.
      There are multiple product lines and very scatered market is also an important point to take care of.
      The detailed answers to your questions are mailed to your E-mail ID.
      If you need any further guidance, you can surely ask your questions here. We are always here to guide you.
      Thank you.

  2. Souvik Reply

    Me and a few of my partners are planning to start an internet business. All of us are currently doing full time jobs. Can that be a problem? I mean can you run a company when you are already employed by another company?

    Our company will be involved in international money transfers (ecommerce, payments for services etc). Do you think an LLP will be the best option for such a company? I read about the different company types that are allowed in India and an LLP seemed to be the best option. Is there a minimum capital requirement for an LLP?

    Thanks and Regards,

    • Scott Wilson Reply

      Mr. Suovik,
      If you are going to carryout your business on a small base then it would be better if you continue with the partner ship format. If you want to expand, the limited liability company would be better option.
      That also depends upon your level of investment. I have seen many partner ship firms operating big investments. So if it is extremely needed, then only establish the company.
      Thank you.

  3. AG Reply

    Dear Sir,
    Me and one my friends are planning to start a HR consulting and Event Management companies/Firms (separate for both). We are in a dilemma whether we should go for a partnership or a Pvt. ltd company. We have been given to understand that pvt. ltd has lot of expense. Kindly suggest. And also if you could enlighten a bit on procedure for both partnership & pvt. Ltd with approx. expense for opening & maintaining.

    Thanking you in anticipation.


  4. Sumesh Sivasankar Reply


    I am an interior designer by profession and is based a Kochi/Cochin, Kerala State, India. I am willing to set up my own firm not under a Private Ltd Company or an Unlisted Public Company but under a LLC or LLP.

    Can you advice me whether, LLC or LLP firm can be registered in India. If so, which is more supportable when dealing with liability shield? Also please let me know the formalities, fees and other requirements of the same.


    Sumesh Sivasankar

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