What is a limited liability partnership company?

BRIEF INTRODUCTION

• Limited Liability Partnership (LLP) is business form which provides benefits of limited liability partnership and adaptability of a partnership business. Compliance requirement is a smaller amount in LLP as compared to company type of business structure.
• Audit is exempted up to certain level of turnover just in case of LLP. Minimum two people can form an LLP. there’s no maximum limit on the amount of its partners. this is often preferred choice for tiny businesses and rather than general partnership. We are leading LLP Registration consultants.

MINIMUM REQUIREMENT TO START OUT AN LLP

1. Minimum Two People: Two people are needed to register the LLP. However, there’s no limit on maximum partners.
2. No Minimum Capital: Capital just in case of LLP is counting on the necessity of the business and contribution to partnership by partners. The taxation on the deed relies on the number of capitals.
3. Resident Person requirement: One Designated partner of LLP must be from India.
4. Unique Name: Name of the LLP should be unique, and it must not be same or the same as the name of any existing company, LLP or trademark which is registered or applied for.

DOCUMENTS REQUIRED FOR LLP REGISTRATION

1. Latest passport size Photographs of all partners
2. PAN (Permanent Account Number) of all Partners (Minimum 2)
3. Identity Proof of every partner, (Aadhar Card, Passport, driver’s license or Voter ID Card)
4. Address Proof of all partners (Bank Statement or Passbook, electricity bill, account, Aadhar card or any utility bill)
5. Copy of Mobile bill, phone bill, electricity bill or statement of all Partners with Present address
6. Registered Office Address Proof – Electricity Bill together with Rent Agreement / ownership proof of proposed registered office.
7. Stamp paper for LLP Agreement of State where LLP is to be Incorporated
8. Documents Must be self-attested

BENEFITS OF AN LLP

Some of the benefits as derived by forming an LLP is as follows –

• Limited liability is ensured in respect of the partners, thereby creating a security towards the member’s personal assets from the liabilities of the business. LLPs are a separate legal entity to the members.
• The operation of the partnership and distribution of profits is decided by legal document between the members. this might leave greater flexibility within the management of the business.
• The LLP is deemed to be a legal person. It can buy, rent, lease, own property, employ staff, enter into contracts, and be held accountable if necessary.
• Corporate ownership. LLP’s can appoint two companies as members of the LLP. In an LLP company a minimum of one director must be an Indian resident person.
• Designate and non-designate members. you’ll be able to operate the LLP with different levels of membership.
• Protecting the partnership name. By registering the LLP at Companies House, you prevent another partnership or company from registering the identical name.

This is not an exhaustive list but covers a number of the key benefits on an LLP.

DISADVANTAGES OF AN LLP

As with all formats of business there’ll be disadvantages similarly as advantages. the subsequent is also considered disadvantageous in some cases.

• Public disclosure is that the main disadvantage of an LLP. Financial accounts should be submitted to Companies House for the general public record. The accounts may declare income of the members which they will not wish to be made public.
• Income is income and is taxed accordingly. There could also be tax advantages in registering as an organization, but this can rely upon your personal circumstances.
• Profit can’t be retained within the same way as a corporation limited by shares. this implies all earned profit is effectively distributed with no flexibility to carry over profit to a future tax year.
• An LLP is required to have a minimum of two members, thus, where any one member decides to depart from the partnership the LLP may need to be dissolved.
• Residential addresses were being recorded at Registered Office of an LLP. Whilst the utilization of ‘service addresses’ now allows for home addresses to be kept out of public view;
  • Any address previously supplied to Companies home is still a part of the general public record unless you procure the records to be suppressed. for several businesses this is often not a controversy.
  • However, there are some examples where this could not be desired. Consider solicitors and partners of law firms that will not want their home address so freely available if their work involves sensitive cases.

This is not an exhaustive list but covers a number of the key issues that some may feel are disadvantageous for an LLP.

FUNDAMENTAL FEATURES OF LLP

Here are the characteristics of a liability Partnership:

1. The key aspect of an LLP is that it’s a separate legal entity; thus, its existence is different from the Members.
2. Members leverage organizational flexibility of a partnership through LLP agreement.
3. Note that LLP agreement may be a private document which must remain confidential to the Members.
4. There must be a minimum of two “designated” members to begin an LLP.
5. The “trading disclosure” of an LLP is analogous to those of an organization.
6. Also, LLPs has the identical accounting and filing requirements as companies.
7. Each member of an LLP is to blame for tax in their share of the income & gains.
8. An LLP can issue debentures on fixed charges or floating charges over the same as that of an organization.
9. A limited liability Partnership must get registered at Companies House.
10. Lastly, the members of an LLP have the good thing about liability

BENEFITS OF LLP REGISTRATION OVER PRIVATE LTD. REGISTRATION

In case, you’re during a dilemma whether to go for LLP registration procedure or Private Ld. registration, take a glance at the advantages of the former:

1. No limit of the greatest number of partners: it requires a minimum of two partners to create an LLP, and there’s no limit on maximum partners. On the opposite hand, a personal Ld. has confined to own no more than 200 members.
2. Low cost of formation: LLP registration procedure cost is relatively low to the incorporation of a Public Ltd. The LLP cost ranges from Rs. 1500/- to approx. Rs. 7000/- whereas, the minimum statutory fee for personal Company is Rs. 6000/-.
3. Least capital requirement: the foremost considerable start of LLP over Private Ld. is that one requires the smallest amount capital to ascertain the business. Further, the contribution of a partner may comprise of tangible or intangible, movable or immovable property.
4. No compulsion for auditing: any company, whether private or public, must get their accounts audited. Despite that, just in case of LLP, there’s no such compulsion. As per the provisions of the limited liability partnership Partnership Act, 2008 LLPs has got to audit their account annually expect those that have a turnover but Rs. 40 lacs or Rs. 25 lacs contribution in any year.
5. Less compliance burden: LLPs must face less compliance burden in contrast to non-public Company. Since an LLP only needs to file two statements, i.e., the Annual Return & Statement of Accounts and Solvency, unlike private companies which require to fulfill a minimum of 8 to 10 regulatory formalities and compliance.

ELIGIBILITY CRITERIA TO OBTAIN LLP REGISTRATION PROCEDURE

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The LLP applicant is required to fulfill the following requirements of LLP registration:

• Ensure to possess a minimum of two designated partners;
• Further, one in every of the partners must be a resident of India;
• All the designated partners shall be receipt of a DPIN (Designated Partners Identification Number);
• Every designated partner requires to carry (Digital Signature Certificate) DSC;
• The applicant shall also provide an address proof in respect of the property termed as the registered office.

LLP NAMES

• An LLP are often registered with any name its members choose as long because it is out there at Companies House. it’s typical to work out the member’s names included within the LLP name but this can be not a requirement.
• as an example, an LLP could also be registered as  XYZ LLP, or it’s going to use a descriptive name like LEGAL ADVISORS LLP or something freestanding like ABC SERVICES LLP. (These names are examples and there’s no connection to any company registered with Companies House at the present or within the future).
• At the time of registering the LLP the members must decide if they’d just like the name recorded at Companies House using “Limited Liability Partnership” fully or the “LLP” abbreviation.

PROCEDURE FOR LLP REGISTRATION

• The biggest challenge which incurs during a business partnership is that the inefficiency of a partner affects the progress of others.
• However, limited liability partnership Partnership or LLP nullifies any such risk. It encourages entrepreneurs to commence joint ventures at all-time low liability.
• Moreover, it’s the safest sort of doing business for startups or small firms. liability Partnership Act, 2008 regulates the activities of a company partnership body and ensures its smooth operations.
• If you furthermore may choose LLP, then you ought to be well-versed with the LLP registration procedure. Needless to stress, this blog will facilitate your usher your doubts with regard to Online LLP registration.

CONCLUSION

So, while concluding, we are able to say that LLP is more beneficial to entrepreneurs than company incorporation. Although LLP and personal Company appear to be the identical, there are some differences that make LLP an improved choice.

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• It goes without saying that LLP registration is an efficient mode of carrying business at the bottom risk. Besides, its name suggests, a limited liability partnership is that the most secure and cheapest business type.
• A business aspirant should step into the competitive market of the company world through LLP. Thus, if you would like any assistance within the LLP registration procedure, contact RJA.