When forming an LLP, there are a few requirements that must be met. Will you be able to lawfully form and manage an LLP if and only if you can meet the following requirements?
- A limited liability partnership (LLP) must be formed by at least two people. There is, however, no upper limit on the number of partners.
- In the case of an LLP, capital is decided by the business’s needs and the members’ contributions to the partnership. The Stamp Duty on the deed is determined by the amount of capital. To start a business as an LLP, there is no minimum capital need.
- A resident of India must be at least one of the LLP designated partners.
- When an LLP’s turnover is equal to or greater than 40 lakh and its total capital contribution is equal to or greater than 25 lakh, its accounts must be audited.
Once you’ve determined that you meet the basic minimum requirements for forming an LLP, you may assess the viability of doing so by reading the reasons for forming an LLP highlighted in the next portion of this blog.
Reason for LLP Registration
- Use a company’s operational ease and flexibility to your advantage.
An LLP’s main advantage is that it’s simpler to establish and administer, with less paperwork. They are less expensive to register than businesses, despite the fact that they exist independently of their partners. Because of its flexibility in structure and management, the LLP is an ideal vehicle for small businesses and venture capital investment.
- Reduce the amount of paperwork and taxes you have to deal with.
An LLP’s annual ROC compliance is lower than that of a private limited company because there is no requirement for a required audit. Furthermore, in comparison to the company’s structure, regulatory compliance is modest. Furthermore, there is no dividend tax in the case of a limited liability partnership (LLP).
- Limit Your Liability by Creating a Separate Legal Entity.
Partners in an LLP have limited liability, which is restricted to their contribution to the LLP. An LLP is, in fact, a different legal entity and juristic person from its partners, and both can sue and be sued. The LLP continues to exist even if one of the partners dies. Furthermore, the ownership of an LLP can be easily transferred to another individual; however, the transferee must be inducted as a designated partner of the LLP. Partners and the LLP can also lend money to one another.
Whether you’re still weighing the pros and cons of forming an LLP or you’re wanting to register an LLP online, we recommend enlisting the help of Aavana’s legal specialists. In their constant effort to ensure that you include the business structure that is most relevant to your needs, our team of pros will leave no stone left. Aavan can help you right now!