Limited Liability Partnerships (LLP)
What is a Limited liability Partnership?
Limited Liability Partnership (LLP) is a corporate business vehicle that provides both the benefits of a company and flexibility of a partnership firm i.e. limited liability and allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.
LLP Offers more enhanced features than a general tradition partnership. It can be registered with minimum two Partners. Limited Liability Partnership provided the benefits of both private limited LLP and General Partnership into a single form of the LLP, and one partner is not liable for another partner's misconduct or wrong decisions. Each partner will have own liability towards the Business. LLP is most preferred by small business owners and for them who are not willing for venture funding in business. The Limited Liability Partnership has more credibility than a General Partnership or Proprietorship business. Annual maintenance of LLP firm is much cheaper than a Private limited or LLP
What are the benefits of an LLP Registration in India?
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No limit on owners of business :
LLP requires minimum 2 partners. There is no limit on maximum partners unlike a private limited company wherein there is a restriction of not having more than 200 members.
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No requirement of minimum contribution:
As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. Moreover, the contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the LLP.
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Lower cost of Formation:
The cost of registering LLP is low as compared to cost of incorporating a private limited or a public limited company.
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No requirement of compulsory Audit:
All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement. A Limited Liability Partnership is required to get the audit done only if:-
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Lower compliance burden resulting in savings:
Approximately at least 8 to10 compliances per annum are required to be made by a private limited company whereas a Limited Liability Partnership is required to file only the Annual Return & a Statement of Accounts & Solvency.
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Taxation Aspect on LLP:
For income tax purpose, LLP is treated at par with partnership firms. Thus, LLP is liable for payment of income tax and share of its partners in LLP is not liable to tax. Thus no dividend distribution tax is payable. Provision of 'deemed dividend' under income tax law, is not applicable to LLP. Section 40(b): Interest to partners, any payment of salary, bonus, commission or remuneration allowed as deduction in the hands of Limited Liability Partnership.
Minimum requirement for LLP Registration
If a body corporate is a Partner, it has to nominate a natural person as its Nominee
There is no concept of share capital, but each Partner has to contribute towards capital of LLP
DIN (Director Identification Number) for all the Designated Partners
DSC (Digital Signature Certificate) for all the Designated Partners
Address proof for office of LLP
What all you get :
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DIN for 2 Partners
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Digital Signature for 2 Partners
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Incorporation Certificate
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LLP Agreement
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LLP PAN Card
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LLP TAN/TDS Number
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Master File of all docs filed for Incorporation