So are you a potential investor who wants to start out an LLP? Well, then you're in the right place at the right time because we are going to be explaining how you'll benefit from the entire process. Here’s a glance at everything you would like to understand regarding the LLP
Limited Liability Partnership (LLP) revamped the business by improvising its structure so that it may be a mixture of a corporation and a partnership firm. While it's benefits and characteristics of a personal Ltd., are often operated flexibly a bit like a traditional partnership.
Limited Liability Partnership (LLP): Benefits or Advantages
- Limited Liability- The most important advantage of doing business as an LLP is that the liability of every partner is restricted to the extent of his/her contribution/share as against the only proprietorship or the normal partnership firm where the private assets of the proprietor or partners might be in danger within the event of a failure of the business. Thus, this mode helps the partners to be free from personal liabilities.
- Raising Capital & Money- Limited Liability Partnership might be formed with a minimum capital contribution as against the Private Limited companies’ requirement of Rs. 1 Lac. Even the contributions might be made in instalments which makes the tiny entrepreneurs/startups avail these benefits.
- Separate Legal Entity- Limited Liability Partnership has its separate existence from its partners. Limited Liability Partnership can sue and be sued in its existence. Also, operating as a company entity/Limited Liability Partnership often gives suppliers and customers a way of confidence during a business. Larger organizations especially will prefer handling corporate entities than proprietorship/partnership organizations, consult a company lawyer to form sure your structure your entity as per your business requirements.
- Board Meetings- Partners aren't subjected to carry 4 mandatory board meetings as needed once a year by the Companies Act. The partners can meet as per their convenience or need basis.
- No limit on owners of the business- An Limited Liability Partnership requires a minimum of two partners while there's no limit on the utmost number of partners. This is often in contrast to a personal Ltd. wherein there's a restriction of not having quite 200 members.
- No requirement of compulsory Audit- All limited companies, whether private or public, regardless of their share capital, are required to urge their accounts audited. But just in the case of Limited Liability Partnership, there's no such mandatory requirement. this is often seemed to be a big compliance benefit. An indebtedness partnership is required to urge the audit done only within the case that:
- The contribution of the LLP exceeds Rs. 25 lakhs, or
- The annual turnover of the LLP exceeds Rs. 40 lakhs.
- Can be Formed at Low Price- the value of registering LLP is low as compared to the cost of incorporating a personal limited or public Ltd.
- Dividend Distribution Tax (DDT) not applicable- within the case of a corporation, if the owners to withdraw profits from the company, further liabilities within the sort of DDT @ 15% (plus surcharge & education cess) is payable by the company. However, no such tax is payable within the case of LLP and profits of a Limited Liability Partnership are often easily withdrawn by the partners.
- Lower Compliance - Approximately a minimum of 8 to10 compliances once a year is required to be made by a personal Ltd. whereas an indebtedness Partnership is required to file only the Annual Return & a press release of Accounts & Solvency.
- Flexible to Manage- LLP Act 2008 gives Limited Liability Partnership the freedom to manage its affairs. Any partner can decide the way they need to run and manage the Limited Liability Partnership, in sort of LLP Agreement. The LLP Act doesn't regulate the LLP to large extent instead of allows partners the freedom to manage it as per their will and fancies.
- Relief in Taxation- Another main advantage of incorporation is that the taxation of a Limited Liability Partnership. LLP are taxed at a lower rate as compared to other Company structure. Moreover, LLP also is not subject to Dividend Distribution Tax as compared to the company, so there'll not be any tax while you distribute profit to your partners.
How can we help you?
As it could be easily formulated because of the less documentation and Limited Liability. If you too are wondering to set up a Limited Liability Partnerships, then the Online Legal India™ expert team can take care through the documentation process. We have a highly qualified CA/CS and 10+ years of experienced lawyers who would assist you to Register your Limited Liability Partnerships We have budgeted services for those who are willing to venture into a company, business or any other kind of organization.