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Limited Liability Partnership

Partnerships are the most common business structure for businesses that have more than one owner. Many businesses, ranging from retail stores to accounting firms, are structured as partnerships. A business partnership is a for-profit business established and run by two or more individuals. There can be any number of partners involved in the business, as long as there are at least two. A business partner is a co-owner of the business.

However, some types of partnership allow at least one owner limited personal liability for the business' financial obligations, such as debts and court judgments. One common structure is the limited liability partnership, or LLP. A limited liability partnership is a newer form of business partnership where all of the owners have limited personal liability for the financial obligations of the business.

There are a number of reasons why many entrepreneurs prefer to go in for a Limited Liability Partnership over a Private Limited Company. It is considered easier to set up, as a rule is comparatively hassle-free in day to day operations, has significantly lower burdensome compliance requirements and costs, and therefore many see it as advantageous to begin their organization in this manner. Let us look at some of the reasons for this choice and the LLP Advantages.

No requirement of minimum contribution

As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital. The particulars of Minimum Capital contribution are 1. Private Company – 1,00,000; 2. Public Company – 5, 00,000; no such mandatory requirement and moreover, the contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the LLP.

No limit on owners of business

An LLP requires a minimum 2 partners while there is no limit on the maximum number of partners; this is in contrast to a private limited company wherein there is a restriction of not having more than 200 members.

Lower Registration Cost

The cost of registering LLP is low as compared to cost of incorporating a private limited or a public limited company. An illustration can show the approximate cost involved in formation of private limited company and an LLP.

No requirement of compulsory Audit

All limited companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement. This is perceived to be a significant compliance benefit. A Limited Liability Partnership is required to get the audit done only in the case that: -

  • The contributions of the LLP exceeds Rs. 25 Lakhs, or
  • The annual turnover of the LLP exceeds Rs. 40 Lakhs

Savings from lower compliance burden

Every year, there are about 8 to 10 regulatory formalities and compliances are required to be duly completed and submitted by a Private limited company whereas a Limited Liability Partnership is required to file only two, namely, the Annual Return & Statement of Accounts and Solvency.

Taxation Aspect on LLP

For income tax purpose, LLP is treated on a par with partnership firms. Thus, LLP is liable for payment of income tax and share of its partners in LLP is not liable to tax. Thus, no dividend distribution tax is payable. Provision of ‘deemed dividend’ under income tax law, is not applicable to LLP. Section 40(b): Interest to partners, any payment of salary, bonus, commission or remuneration allowed as deduction.

Dividend Distribution Tax (DDT) not applicable

In the case of a company, if the owners to withdraw profits from company, an additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is payable by company. However, no such tax is payable in the case of LLP and profits of a LLP can be easily withdrawn by the partners.

TO BE SUBMITTED BY PARTNERS

  • Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
  • Scanned copy of Voter's ID/Passport/Driver's License
  • Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
  • Scanned passport-sized photograph Specimen signature (blank document with signature [partners only])

Note: Any one of the partners must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

FOR THE REGISTERED OFFICE

  • Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
  • Scanned copy of Notarised Rental Agreement in English
  • Scanned copy of No-objection Certificate from property owner
  • Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence, too.

  • You pay a Fixed Price for Litigation
  • No hidden costs.
  • No stress of litigation
  • Experienced and dedicated professionals assigned to your case
  • Regular case Updates

6 WORKING DAYS

All the proposed partners need a Digital Signature Certificate (DSC), which is necessary to get them a Digital Partner Identification Number (DPIN). You will only need to provide a handful of scanned documents; our representatives will ensure the forms are correctly filled.

12 WORKING DAYS

As soon as we apply for the DSC, we will ask you for the unique name you wish to give your LLP. These will be used to file for incorporation with the MCA. The Certificate of Incorporation will be approved at the end of this process.

2 WORKING DAYS

Every LLP needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves, but you will need to courier hard copies of the required documents yourself. The PAN and TAN will be couriered to your registered office address in 21 working days.

• Pay Online
• Our Customer Support executive will call you for details of your query and forward it to the advocate
• You will be connected with the lawyer for a 15-minute consultation.
• A first draft will be sent to you for review and changes
• You will be connected with the lawyer for again for a time span of 15 minutes to discuss the required changes.
• No further consultation with the advocate forms a part of this package.

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