LIMITED LIABILITY PARTNERSHIP
Limited Liability Partnership (LLP), introduced only in 2008, has quickly become a popular legal structure for businesses. And its name suggests that the liability of its partners is limited unlike partnership firm. A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or liable for another partner’s misconduct or negligence.
The LLP is also cheaper and easy to incorporate and manage and involves fewer compliances and can be a smart choice from a tax perspective. However, if one is looking to raise venture capital or attract talent with employee stock options, then the LLP is not your cup of tea since the investors are mostly expected to take up some percentage of the profit shares from the company and one doesn’t have the option of generating equity in an LLP. This is why they are most popular with professional services firms (web designers or architects, for example) that require no equity funding. LLPs are ideal for startups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.
|LIMITED LIABILITY PROTECTION||Businesses often need to borrow money. In a General Partnership, partners are personally liable for all this debt. So if it cannot be repaid by the business, the partners would have to sell their personal possessions to do so. In an LLP, only the amount invested in starting the business would be lost; all personal property would be safe.|
|BETTER IMAGE AND CREDIBILITY IN MARKET||Limited Liability Partnership (LLP) is a popular and well known business structure in the world. Corporate Customers, Vendors and Govt. Agencies prefer to deal with LLP instead of proprietorship or normal partnerships.|
|NO AUDIT REQUIREMENT AND MINIMAL COMPLIANCES||LLP is easy to manage and statutory audit is not required for Limited Liability Partnership. LLP is most ideal for small enterprises.An LLP only requires audited annual returns to be filed if it has a turnover of greater than Rs. 40 lakh or capital contribution of over Rs. 25 lakh.|
|TAX ADVANTAGES||There are some important advantages over the private limited company. For example, Dividend Distribution Tax and tax surcharge don’t apply. Loans to partners are also not taxable as income.|
|SEPERATE LEGAL ENTITY||A LLP is a legal entity and a juristic person established under the Act. Therefore a LLP form of organization has wide legal capacity and can own property and also incur debts. The Partners of a LLP have no liability to the creditors of a LLP for such debts.|
|PERPETUAL SUCCESSION||A LLP has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A LLP, being a separate legal person, is unaffected by the death or other departure of any Partner but continues to be in existence irrespective of the changes in Partnership.|
|EASY TRANSFERABILITY||The ownership of a LLP can be easily transferred to another person by inducting them as a Designated Partner of the LLP. LLP is a separate legal entity separate from its Managing Partners, so by changing the Managing Partners, the ownership of the LLP can be changed.|
Limited Liability Partnership Incorporation
Step 1 : Obtaining DSC (Digital Signature Certificate)
Digital Signature Certificate (DSC) Applicants can directly approach Certifying Authorities (CAs) with original supporting documents, and self-attested copies will be sufficient.
Step 2 : Name Approval
Choosing a memorable and acceptable name is one of the important step in registering a company in India. An easy to remember name can make the company a household brand.
Step 3 : LLP Incorporation
Incorporation of a new LLP. Applicant files should contain the details of the proposed LLP along with details of the partners and designated partners.
Documents required for One Person Company incorporation
There are two different criteria for Registering a One Person Company
Firstly for the DIRECTORS & SHAREHOLDERS and the documents required are :
Secondly for the REGISTERED OFFICE and the documents required are :