The Limited Liability Partnership has become one of the most popular forms of organization among young entrepreneurs. LLPs are legal entities separate from companies. For a Limited Liability Partnership to be incorporated, there must be at least two partners. When you form an LLP, you have to comply with fewer regulations and compliances. Incorporated under the Limited Liability Partnership Act of 2008, LLPs are limited liability partnerships. Are you planning to form an LLP? In just a few days, our Tax Experts will assist you in registering your LLP. Find some common questions and proced with LLP registration in India.
- What is the difference between a Partnership Firm and a Limited Liability Partnership?
An average Partnership Firm involves every partner being responsible for the firm’s operations. The partner’s liability is limited to his agreed contribution under an LLP. The partners are not liable for the independent or unauthorized actions of the other partners.
- Can you please tell me how much capital a Limited Liability Partnership requires?
In order to start a Limited Liability Partnership, you do not need a minimum amount of capital
- Who can incorporate LLP?
There must be two partners for an LLP to be incorporated. Limited Liability Partnership Firms can be formed by any individual or corporation who consents to become partners.
- Does the Income Tax Act treat partnership firms and LLPs differently?
There is a flat 30% tax rate for both general partnerships and limited liability partnerships. Other provisions of the income tax act apply similarly, except for general partnership firms, which are subject to the presumptive taxation scheme if their turnover is less than Rs. 2 crore in business or Rs. 50 lakh in profession, LLPs are explicitly exempt from maintaining books of accounts or having their accounts audited.
- In comparison with a general partnership, what are the advantages of forming an LLP?
Partnerships are liable for the debts of the firm, and partners’ personal property may even be used to satisfy the firm’s debts in a general partnership. A limited liability partnership limits the liabilities of the partners.
The LLP structure shields partners from liability for other partners’ errors and omissions, whereas general partnership firms can hold partners accountable for their partners’ mistakes.
- For LLPs, what is the audit requirement?
An LLP’s accounts must be audited when their turnover exceeds 40 lakhs or when they make a capital contribution of 25 lakhs or more. LLP auditors are appointed annually by designated partners. First auditors are appointed before the financial year ends. A month before the close of the relevant financial year, the designated partners appoint or reappoint auditors
- Incorporated LLP received COD/VPP courier, what should I do?
Data on the LLP can be found freely on the MCA’s official website after the LLP is incorporated. Many fraudsters use this data to steal money. Printouts of the data from MCA’s website are sent to registered address of company via VPP/ COD, and you are asked to pay for receiving the delivery. We recommend not accepting the courier. Your company registration documents will be provided to you without any additional cost by All India ITR.
LLP Registration in India: Features and Benefits
The efficiency of one partner affects the efficiency of another in a business partnership. LLPs eliminate this risk. This type of business structure allows entrepreneurs to begin joint ventures at the lowest liability possible. Additionally, an LLP is the safest form of business for startups and small businesses. A LLP Act, 2008 governs and regulates the activities of corporate partnership bodies. Registration as an LLP requires understanding the registration process. If you have any concerns about Online LLP registration, here’s a handy resource for you.
Fundamental Features of LLP
Listed below are the characteristics of a Limited Liability Partnership:
- As LLPs are separate legal entities, their existence is distinct from that of their members.
- The flexibility of a partnership can be enjoyed by members of an LLP agreement.
- There is a confidentiality clause in the LLP agreement that must be respected.
- A Limited Liability Partnership must have at least two “designated” members.
- As with a company, an LLP must disclose its trading activity.
- The same accounting and filing requirements apply to a limited liability partnership as to a corporation.
- The income and gains of each member of an LLP are subject to tax.
- LLPs can issue debentures similar to companies on fixed or floating charges.
- For Limited Liability Partnerships, registration at Companies House is required.
- Last but not least, members of an LLP are limited in their liability
Benefits of LLP Registration in India
When deciding between LLP registration and private limited company registration, consider these benefits:
No limit for number of partners
In an LLP, a minimum of two partners is required, and the maximum is unlimited. A Private Limited Company, on the other hand, cannot have more than 200 members.
Incorporation of LLPs is relatively cheaper than incorporation of PLCs. A LLP can cost anywhere from Rs. 1500/- to around Rs. 2000/-. Private companies must pay a minimum statutory fee of Rs. 6000/-, while public companies must pay a minimum of Rs. 7000/-.
Least capital requirement
The advantage of LLPs is that they require the least amount of capital to begin operations. In addition to tangible and intangible contributions, partners may contribute movable and immovable property.
Less Compulsion for Audit
Public or private companies must have their accounts audited. There is no requirement for LLPs to do this, even though they are not obligated to do so. The Limited Liability Partnership Act, 2008 requires LLPs to review their accounts annually, except for those with less than Rs. 40 lacs turnover or Rs. 25 lacs contribution in a financial year.
A smaller compliance burden
Private companies are more burdened by compliance than LLPs. On the other hand, private companies need to comply with between eight and ten regulatory formalities and compliance requirements, whereas LLPs only need to comply with two statements.