A limited liability partnership (LLP) limits the scope of exposure that general partners must face due to partnership debts, liabilities, and malpractice. Texas enacted the first ever LLP law in 1991. Nearly every state now has provisions for LLPs. States enacted LLP law in response to the growing number of general partners present in large partnerships. This growing number of general partners added to the complexity of doing business as a partnership and increased the number of lawsuits brought against the partners, thereby increasing malpractice insurance costs.
Here in this article, we will understand the features and benefits of LLP registration
Features of Limited Liability Partnership
- The LLP has a separate single entity.
- Minimum two partners are required.
- No requirement for minimum capital contribution.
- The mutual rights and duties of LLP and its partners shall be governed by LLP agreement between the partners or between LLP and its partners.
- Provision for Firms/ Private Limited Companies/ Unlisted Companies to convert into LLPs.
- LLP registration online is the easiest procedure to register a company or a firm.
Benefits of Limited Liability Partnership
- Owner of Business
LLP requires a minimum of 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.
- No requirement of minimum contribution
As against the company, there is no minimum capital requirement in LLP. An LLP can be formed with the least possible capital.
- Lower cost of formation
The cost of registering LLP is low as compared to the cost of incorporating a private limited or a public limited company.
- 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 and a Statement of Accounts and Solvency.
- 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. As per the provisions of LLP act, accounts to be audited annually except for LLPs having a turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year.
- 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.
A Limited Liability Partnership firm is a type of firm which is accepted by various partners. For LLP registration, you can visit the Online LLP registration portal and complete the process.
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