Limited Liability Partnership (LLP)
Minimum Two persons.
One Partner of LLP must be a resident of India.
Unique Name of LLP.
Every Designated Partners must obtain Designated Partner Identification Number (DPIN) from the Central Government. In case you already have a DIN (Director Identification Number), the same can be used as a DPIN.
No Restriction as to the maximum number of partners in a LLP.
Well, to register an LLP in India, first check eligibility and required documents, then understand the detailed step-wise procedure which is followed for registration of Limited Liability Partnership. LLP is an alternative corporate business form that gives the benefits of limited liability as present in a company and the flexibility of a partnership business; In other words, it offers advantages of both worlds by bringing simplicity in management akin to partnership firms and scope of expansion like that of a company. The biggest advantage of LLP form of business over a Pvt Ltd Company is in the fact that there is less compliance requirement in comparison to a Company.
What is a Limited Liability Partnership (LLP)
LLP can be formed after a general partnership is set up.The LLP formation is popular when a ‘professional partnership’ would like the benefit of protected liability.LLP’s may be suitable when the partners are members of an institute or individual earnings are clearly defined and not simply added to one pot and distributed by dividend. Within an LLP the earnings of the members is normally seen as personal income. In this, the partners have the right to manage the business directly, unlike corporate shareholders. There must be a minimum of 2 partners although there is no maximum limit. LLPs must maintain annual accounts, however the audit of accounts is required only if the contribution exceeds Rs. 25,00,000 or if the annual turnover exceeds Rs. 45,00,000.
Advantages and Disadvantages
Liability Protection: In general partnerships, each participant is personally responsible for the actions of the company. This includes debts, liabilities and the wrongful acts of other partners. One advantage of a limited liability partnership is the liability protection it affords.
Tax Advantages: Individuals in a partnership are normally liable for filing personal income taxes, self-employment taxes and estimated taxes for themselves, according to the Internal Revenue Service.The partnership itself is not responsible for paying taxes. The credits and deductions of the company are passed through to partners to file on their individual tax returns.
Flexibility: Limited liability partnerships offer participants flexibility in business ownership. Partners have the authority to decide how they will individually contribute to business operations. Managerial duties can be divided equally or separated based on the experience of each partner.
Public disclosure: Financial accounts have to be submitted to Companies House for the public record. The accounts may declare income of the members which they may not wish to be made public.
Ownership issues: An LLP must have at least two members. If one member chooses to leave the partnership the LLP may have to be dissolved.
No profit certainty: Profit can not be retained in the same way as a company limited by shares. This means all earned profit is effectively distributed with no flexibility to hold over profit to a future tax year.
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