What is LLP?
If you want to be a part of an enterprise without the liability of company partnership, the LLP (Limited Liability Partnership) is the best option for you. It is nothing but a combination of both partnership and corporation. So, the partners involved in an LLP are not bound by law to pay for others. Any malpractices on the assets by other parties can be avoided in this case. For Startups and MSME (Micro Small Medium Enterprise), an LLP Registration is a stepping stone to greater growth. Protecting one’s asset is important and you should know how to do it. Here’s why you should get a Limited Liability Partnership.
Requirement to start an LLP
- At least two Partners are required to start the LLP.
- Between two designated partners, one has to be an Indian Citizen residing in India.
- A registered office in India.
Required Documents to form an LLP
1. ID Proof of Partners
2. Address Proof of Partners
3. Passport (in case of one partner being an NRI)
4. Proof of Registered Office Address
5. Digital Signature Certificate of partners.
Characteristic of an LLP
- Their legal entity is separate from the members.
- They share limited liability with their members.
- Taxation is the same as a partnership.
- “LLP agreement” between the partners is a confidential document only accessible to the members.
- LLP needs at least two designated members to start the company.
Benefits of an LLP
- Limited Liability: As it is quite clear from the name, Limited Liability Partnership provides limited liability to the existing partners in a company. So, you don’t have to hold yourself accountable to another partner’s loss. You can save your personal assets from dissolving in the company’s name. It stands like a concrete wall between your personal and business assets.
- Easy Transferability of Ownership: LLP provides easy transferability to each and every partner in a company. There are no restrictions over joining or leaving an LLP at any given time.
- Tax Exemption: The tax rates on an LLP are much lesser when compared to other company partnerships.
- No Compulsory Audit: Every company is supposed to audit all their expenses in a financial year. But, in case of an LLP, there is no mandatory audit required. Although, in case of a partnership where the turnover of the company exceeds Rs 40 lakhs and the contribution is more than Rs 25 lakhs, an audit is required.
Limitations of an LLP
- Heavier Penalty: LLP is required to file all compliances annually each year. Failing to do so, it has to incur a heavy penalty.
- Ownership Transfer: If a partner wants to transfer his/her ownership rights then he/she has to obtain the consent of all the partners.
- Number of Partners: At least two members are needed to form an LLP. If one member leaves the partnership, the LLP will be dissolved.
- Non-recognized in many states: LLP is not yet recognized in all states. So it is particularly difficult to gather sponsors or investors.
- Inclusion of Indian citizen: Two foreign residents cannot start an LLP in India. One partner must be an Indian for an LLP to form.
How can we help you?
As we all know, the digital platform allows different kinds of services nowadays. Online Legal IndiaTM provides you with the perfect platform to register for your Limited Liability Partnership online without any hassle and at very nominal charges.
Other legal services like Company Registration, GST registration, FSSAI Registration, Trademark Registration, etc. are available as well. The trust bridge between us and our family of more than 120000 customers is our strength. Our legal experts are always there to guide you throughout the procedure.