Limited Liability Partnership, (LLP)
Limited Liability Partnership is a new business form to provide an alternative to the traditional partnership firm which has unlimited liability on Partners, The LLP is a body corporate and a separate legal entity. LLP is a new corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company. An alternative corporate business that provides the benefits of of a company, band allows its members the flexibility of organizing their internal management on the basis of llp agreement, as is the case in a partnership firm.
Limited Liability Partnership Registration
Limited Liability Partnership Registration can be formed with two or more persons - one person should be resident in India, may form a Limited Liability Partnership, The LLP is a suitable for small enterprises. The basic idea behind the introduction of Limited Liability Partnership is to provide a form of business organization that is simple. A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization and IN LLP partner is not responsible or liable for another partner's misconduct or negligence. Therefore, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a company.. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents. LLP is one of the easiest form of business to incorporate and manage.
Requirements for LLP Registration
- Minimum two Designated Partners
- Minimum Capital Requirement
- At least one Indian Resident as Designated Partner
- DPIN/DIN for all Partners
Advantages of LLP
Minimum contribution not required:
A LLP can be formed with least possible capital. As like private & public limited company Minimum Capital requirements are not necessary for LLP.
Low cost of Formation and compliances.
The expense of incorporating LLP is low when comparing to other forms of business entity in India. & the statuary compliance is very low when compared to private limited companies, Limited Liability Partnership is required to file, the Annual Return and Statement of Accounts and Solvency.
No compulsory Audit:
Every company, whether private or public limited companies are required to get their records reviewed. In the case of LLP, there is no such compulsory necessity. A Limited Liability Partnership is required to have the audit only in following case.
- If The contribution of the LLP above Rs. 25 Lakhs, or
- IF The yearly turnover of the LLP above Rs. 40 Lakhs
An LLP is a separate legal entity, . It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status does.
On account of the independent existence, the creditors of the company can recover their money only from the company and the property of the company.
LLPs are taxed like general partnership firms. They are exempted from 10% surcharge. The LLP will be allowed to pay the up to 90% to the partners as remuneration. This means, the partners will have to pay tax on the amount paid to them.
Other Important Advantages:
- Less statutory compliances & statutory records
- No requirement of any minimum capital contribution
- No restrictions as to maximum number of partners
- Easy to dissolve or wind-up
- Separate legal entity
- Perpetual existence irrespective of changes in partners
- LLP & its partners are distinct from each other
- Partners are not liable for Act of other partners.
- Personal assets of the partners will not be affected
Documents for LLP registration in india
Documents required for designated partner
- Copy of pan card
- Copy of ID proof – (Voter's ID/Passport/Driver's License)
- Passport Size Photograph – 2 nos
For The Registered Office
- Copy of Electricity bill.
- copy of Rental Agreement
- Copy of No-objection Certificate from property owner
- Copy of Sale Deed/Property Deed (in case of owned property)