LLP Formation-Easy and Online
As compared to a private company, the number of compliances are lesser in case of Limited Liability Partnership (LLP). It is very easy to form a LLP, as the process is very simple as compared to Companies and does not involve much formality. There is less paperwork as incorporating it can be done online and it is formed in much lesser time.
There is no minimum capital requirement to form a LLP. An LLP can be formed with least possible contribution. Moreover, contribution can also be in the form of tangible or intangible property or any other benefit to the company.
As compared to other body corporates, Limited Liability Partnership has lesser compliances to be done. Unlike other body corporates, it is not mandatory for LLP to get its books of accounts audited.
As the name suggests, liability of the owner is limited. LLP is a separate legal entity, and is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution it. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Separate Legal Entity
LLP is a body corporate and a legal entity separate from its partners. It will have perpetual succession. Irrespective of the changes in the partners, it shall continue to exist as a separate business entity. It shall continue to exist till it is formally wound up, liquidated or by any other means shut down.
LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. This enables third parties to build trust in it as compared to partnership and proprietorship firms.
Unlike limited companies, there is no limit on the number of partners in a Limited Liability Partnership. To incorporate a LLP minimum requirement of partners is 2 however there is no maximum limit.
- Renowned and accepted form of business worldwide
- Body corporate can be a partner of an Limited Liability Partnership
- It is treated on a par with partnership firms for income tax purpose, thus it is not required to pay Dividend
- Distribution Tax like companies
- It will have more flexibility as compared to a company
- Operates on the basis of an agreement
- Provides flexibility without imposing detailed legal and procedural requirements.
CA Ruchi Shah
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