Closing a limited liability partnership
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Overview of Closing a Limited Liability Partnership (LLP)
Is your LLP not conducting business operations for the last year?
Has your LLP not started its operations after registration?
If yes, it's time to reconsider your decision to run an LLP business and
proceed with closing your Limited Liability Partnership.
A Limited Liability Partnership (LLP) that has not been active since its
incorporation or has ceased operations for at least one year can apply to the
Registrar to close the LLP and remove its name from the LLP Register. If your
LLP has become dormant, it’s better to close it rather than deal with ongoing
compliance requirements and the risk of penalties for inactivity.
At Fastzeal, our consultants are here to help you close your LLP
efficiently.
Benefits of Closing an LLP
1. Compliance-Free: Once your LLP is closed, there’s no need to worry about staying compliant, as the business will be dissolved.
2. No Penalty: Once the closure process starts, there are no concerns about pending fines or penalties.
3. Resource Utilization: If the current business isn't profitable, you can redirect resources to more promising opportunities.
Conditions for Closing an LLP
The closure of an LLP can take place under the following conditions:
1. The LLP hasn’t been active since its incorporation or for at least one year.
2. The LLP has no assets or liabilities at the time of the closure application.
3. The LLP’s bank account has been closed.
4. Consent from all necessary parties, including creditors, authorities, and partners, has been obtained.
Reasons for Closing an LLP
Common reasons why businesses choose to close their LLP include:
1. Completion of the specific purpose for which the LLP was created.
2. Insolvency of the LLP.
3. The LLP has not been active for a year.
4. A court order mandating the closure of the LLP.
5. The partners are no longer interested in continuing the partnership.
6. After the death of a partner, the surviving partner wishes to close the LLP.
Documents Required for Closing an LLP
The necessary documentation includes:
1. Address proof of the LLP.
2. NOC from the landlord (if the registered office is rented), rent agreement, and utility bills.
3. A statement of accounts showing NIL assets and NIL liabilities, certified by a Chartered Accountant.
4. Latest ITR acknowledgment.
5. Copy of the original LLP agreement and any amendments.
6. An affidavit from the designated partners stating that the LLP has not commenced business or has ceased operations, has no liabilities, and indemnifies any potential future liabilities.
7. NOC from creditors and partners (if applicable).
8. Authority document authorizing the application for closure.
9. Indemnity bond.
Fastzeal Support in Closing Your LLP
Fastzeal offers comprehensive assistance for closing your LLP:
1. Expert guidance in preparing resolutions for the closure of your LLP.
2. Over 10 years of experience helping entrepreneurs close their LLPs.
3. Successful support for 200+ entrepreneurs in LLP closures.
4. Expert advice on filing the necessary Form 24 for closure.
5. Assistance with the removal of the LLP name from the register to ensure smooth closure.
6. End-to-end support in all documentation for closing an LLP.
Frequently Asked Questions:
A 'Limited Liability Partnership', i.e. LLP, is a partnership under which some or all the associates have limited liability. It provides the benefits of limited liability of a company along with the flexibility of a partnership.
Given below are the two cases in which closing a limited liability partnership is required-
1. When the LLP is inoperative from the date of incorporation or inactive for at least one year
2. When LLP does not have any assets/liabilities as on the date of application
In matters where the LLP wants to close down its business or where it is not carrying on any business operations for one year or more, the title of LLP can be struck off by the register or by the LLP in 'e-Form 24' with the consent of all partners.
E-Form 24 is used for producing an application to the Registrar of Companies for striking off the name of the LLP or closing a limited liability partnership.
Given below are the conditions under which a defunct limited liability partnership can be struck off-
1. Since its incorporation, the LLP has been inactive and has not conducted any business activities
2. The LLP does not have a bank account
3. No creditors or, assets or liabilities
4. The LLP has not performed any business operations for at least one year
The designated partners have to sign the application along with the consent of all partners for closing a limited liability partnership.
Minimum one year has crossed after incorporation of the LLP for making an application for striking off the name of the LLP or closing an LLP.
If LLP started operation and closed in between, all returns shall be filed until the date of service of the LLP.
In case business is originated and stopped in between, LLP shall file all Income tax returns till the date of administration. LLPs did not begin service can file application for closure of LLP without filing returns.
No, once closure request for a limited liability partnership, there is no need to submit any returns.
