A Limited Liability Partnership(LLP) is an easy-to-maintain corporate structure that benefits owners by limiting their liability. It took shape in India from January 2009 onwards and was an instant hit with start-ups and professional services. Get quick and easy LLP Incorporation with Fincrat. Our team of expert CSs will handle the entire incorporation process. The fastest and most affordable way to get your LLP registration is just a click away.
Limited Liability Partnership, also known as LLP, is a balanced structure that offers the benefits of a conventional partnership and a private limited company. LLP is governed under the Limited Liability Partnership Act, 2008. LLP offers crucial benefits of a company structure like the limited liability of the partners and separate and perpetual legal existence, with lower compliance and structured roles and responsibilities than a company.
Individual partners are protected from joint liability created by another partner’s misconduct and no partner is liable on account of unauthorised conduct of other partners unlike a partnership firm where the liability becomes unlimited.
The idea behind LLP was to deliver a form of business that's easy to maintain and profit holders with limited liability. For this reason, LLP Incorporation is a popular business formation among service businesses and professional enterprises like Chartered Accountants, Company registrars, Management Consulting Businesses, Recruiting enterprises, and other services- grounded businesses.
Therefore, due to the key benefits of limited liability and ease of compliance, Limited Liability Partnership( LLP) is a popular and well specified business structure in the world.
Limited Liability Protection to Partners’ personal asset
In case of LLP, liability of partners is only limited to contributions made by them. Partners are not personally liable for the debt of the LLP.
Separate Legal Entity
An LLP enjoys the advantage of a separate legal identity from the point of view of the law which clearly states that the LLP's assets and liabilities are not the assets and liabilities of its partners.
Minimal Compliance with no Audit requirements
LLPs are easy to administer and do not require legal review. LLPs are best suited for small businesses. A tax audit is also not required for LLPs with capital less than ₹ 25 lacs with turnover not exceeding ₹ 40 lacs
Perpetual Existence
LLP continues to exist beyond the existence of its Partners. This is not possible in traditional partnership firms.
No Minimum Capital
No minimum capital is required to form an LLP. No minimum capital contribution from partners is required. A limited liability partnership can also be registered with a minimum of Rs. 1000 as a total capital contribution
Better Flexibility
Transferring the ownership of an LLP is also simple. A person can easily be inducted as designated partner in LLP and the ownership is transferred to them.
Easy Transfer
Interest in Limited Liability Partnership can easily be transferred by introducing a new Designated Partner in LLP and it will not affect its existence as it is a separate legal entity.
LLP Tax Benefits
It is also exempted from various taxes such as dividend distribution tax and minimum alternative tax. The rate of tax on LLP is less than as compared to the company.
Suitable For Small Business
LLPs with capital of less than ₹ 250,000 and annual turnover less than ₹ 40,000 do not require formal checks. This makes registering as an LLP beneficial for small businesses and start-ups.
The following documents are required for LLP Incorporation -