What Is LLP And What Are The Benefits?

Limited Liability Partnership businesses are a globally accepted formation of entities for ease of doing business. They have been in operation in various countries for decades. India was a bit late in introducing it to our business segments. Now that LLPs are widely recognized business institutions, we should try to get maximum advantage of the new norms.

Scope And Security

The personal assets of the owners cannot be made liable for any business failures due to unforeseen circumstances. In a proprietorship or a partnership firm the assets of the owners can be attached.

The LLP act of 2008 absolves an LLP from the obligations contained in the Indian partnership act of 1932.

Solvency

In case of winding up of the LLP, only the assets belonging to it can be utilized for clearing debts. In simple terms, the partners are not liable to give their assets for the process. Their credibility does not come under scanner and hence their future endeavors will not be affected. 

Auditing

Units having less than 25 lakh rupees capital do not require auditing. However, if the annual turnover is more than 60 lakh rupees, the LLP should undergo auditing procedures. All the details regarding auditing requirements and formation can be had by meeting a reputed agency involved with LLP affairs.

Tax For LLPs

When companies pay a tax of 33.99% on profit, it is only 30.9% for LLPs. They do not have to pay the 10% surcharge. After paying tax on 40% or 10% on profits the remaining profits are paid to its partners as honorarium. So the onus of income tax is not on the LLP itself but on its partners. 

Major Advantages Of An LLP

i. A corporate body can be included as a partner.

ii. Compared to other business entities, intervention from government is minimal.

iii. LLP is a globally recognized body. This provides a lot of ease of doing business for international trading.

iv. Initial expenses for forming the LLP is very less.

v. Unlike companies, the statutory compliances are minimal.

vi. Only two partners are needed for formation. There is no limit to the maximum number of partners.

vii. The legal records to be maintained are much less.

viii. There is no cap on minimum capital requirements.

ix. An LLP can be dissolved very easily.

Taxrobo is a reputed and experienced company that boasts of many renowned clients. They can be contacted here for completing all jobs related to your LLP.

Forming An LLP In India

Follow the below simple steps to register your LLP.

1. Application

i. Get your digital signatures from an authorized agency.

ii. Get the DIN (Director Identification Number) by applying on form DIR-3.

iii. Check and avail the proposed name for your LLP.

2. Incorporation

i. Apply by duly filling up form FiLLiP.

ii. Pay the applicable fees.

iii. Get DPIN for those partners who have not yet obtained a DIN.

3. LLP Agreement

i. Use form 3 available on the MCA website to file your agreement.

ii. It should be done within 30 days of incorporation.

iii. It should be created on stamp paper as per the cost designated by the respective states.

An experienced company will make your LLP agreement and complete all filing processes online to your satisfaction. 

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.