What is an Limited Liability Partnership?

What is an Limited Liability Partnership

What is an Limited Liability Partnership?What is an Limited Liability Partnership?

Limited liability partnership or LLP is a partnership firm which is registered under LLP act 2008 with MCA It has been introduced in the year 2008 in India via Limited Liability Partnership Act, 2008.

It is a partnership where the partners don’t have unlimited liabilities which means that in case of an adverse situation in LLP or declares bankruptcy in all the partner will only lose the value of his investment and he is not liable to other outstanding liabilities like creditors etc., partner’s assets will not be seized or sold. earlier this benefit was only available for companies.

By protecting the partners in this way, many more people have been encouraged to invest in LLP.

BENEFITS OF FORMATION OF LIMITED LIABILITY PARTNERSHIP

The LLP is a mix combination of advantageous features of both partnership and company. LLP covers the benefits of both partnership and company and thereby makes a better form of organisation.

For Example

• Minimum capital requirement

There is no limit for the requirement of capital by the partners in LLP formation it can be registered with any amount of capital which is decided by the partners in LLP agreement there is no limitation in the act.

• Cost of registration is less

The cost of registration is very less as compared to incorporating of private limited co, public limited co or one-person company as very nominal fees is to be paid for name approval and incorporation form.

• No compulsory audit

There is no need for compulsory audit the LLP is only liable to audit if the partner’s contribution exceeds rupees 25 lakhs or the annual turnover of LLP exceeds Rs 40 lakhs.

• Lower compliances& fewer regulations as compare to companies

The compliances for LLP’s are very less as compare to companies as llp don’t have to conduct AGMs and there is no need to submit directors report, no need to hire a company secretory etc.

• One partner is not liable for another partner’s misconduct or negligence

As mentioned above in case of an adverse situation in LLP or declares bankruptcy in all the partner will only lose the value of his investment partner’s assets are safe.

• Better recognition and goodwill in market

Corporate clients, government agencies, vendors prefer to deal with llp instead of partnership firm or proprietorship firm, etc due to the transparent system of the registrar of companies also it has good credibility & recognition in the market as it is a registered form of business.

• can convert other entities into LLP

Any registered partnership with fulfilling some conditions like all partners consent, all partner must be continued in llp upto date ITR must be filed, consent of all creditors etc.

can be convert into limited liability partnership also any private limited /unlisted public company with fulfilling some conditions like no security interest in its assets all shareholders must become partner upto date ITR & roc returns must be filed, no open (unsatisfied) roc charges at least one balance sheet and annual return should have been field filed by the company after its incorporation.

Looking for LLP/Company Formation?

We Bashmakh & co. will help you in LLP company registration, we also provide you guidance in ROC compliances(submissions and filling of required forms with MCA), accounting, taxation and Audit services, and many more.

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