An LLP is a type of business entity where all the partners have limited liabilities. The LLP is the most popular option for the professionals for conducting their business and it is a good choice for those who are involved in the business of consultancy.
- It is a separate legal entity and the partners are liable to their respective contribution. It has flexible management roles
- It is easier to form an LLP. Formation of an LLP only require the partners to fill out a registration form and file it with the local secretary of the state
- The cost involved in registering an LLP is comparatively lesser than that of a Private Limited Company.
- Transfer of ownership is easy.
- There is no maximum limit of partners when it comes to incorporating your business as an LLP.
- A minimum capital requirement is not needed to register your firm as an LLP
- The liability of members in respect in respect to the LLPs debt is limited. The personal assets remain of the members remain safe even if the company goes bankrupt.
- An LLP has the organizational flexibility of a partnership and the provisions dealing with the day to day running of the LLP will normally be contained in a written LLP agreement. An LLP agreement will typically deal with matters such as Profits and losses, Drawings, Ownership of property etc.
- LLP is only required to audit the account in the following situation:
- When the contributions of the LLP exceeds Rs.25 lakhs or
- When the annual turnover of the LLP exceeds Rs. 40 lakhs
- Compared to other entities Compliances are on the lesser side.
- The legal identity of LLP doesn’t get affected by the change of partners or even the death of Partner.
Always ensure to get an insight into various advantages that come with registering your business under different types of registrations. Having an idea about the advantages of each business entity will help you structure out a good business plan.
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