Limited Liability Partnership is a type of alternative corporate business structure that combines the benefits of a company’s limited liability with the flexibility of a partnership. The LLP can continue to exist even if the partners change. It has the ability to enter into contracts and hold property in its name. The LLP is a separate legal organisation with full accountability for its assets, but the partners’ liability is limited to their agreed contribution to the LLP. The Ministry of Corporate Affairs has registered the Limited Liability Partnership Firms. As a result, their compliance becomes even more critical. To begin your LLP Compliance procedure with TaxHelpdesk. It offers astonishing income tax consultation and can also help you with LLP Registration. Keep reading this blog to learn more.
Limited Liability Partnership- LLP
A Limited Liability Partnership is a business that requires at least two members (but can have up to five Designated Partners (without DIN)) and has no upper restriction on the number of members. The members of an LLP have limited liability.
Minimum Requirement to be fulfilled in case of LLP as a Startup
To begin the LLP establishment process, a minimum of two Partners are necessary.
Two selected partners, one of whom must be a resident Indian citizen.
In India, there is a registered office.
The Benefits of a Limited Liability Company as a Startup
- The fundamental advantage of an LLP is that it is simpler to establish and run, with fewer paperwork.
- It is less expensive to register than a corporation.
- LLPs are similar to corporations in that they exist independently of their partners.
- A limited liability partnership (LLP) can be formed with any amount of minimum capital.
- The partners’ responsibility in the LLP would be restricted to their agreed-upon contribution.
- There is no obligation for a mandatory audit.
- Annual ROC compliance in LLP is lower than in Private Limited Company.
- Because of its flexibility in structure and administration, the LLP is an ideal vehicle for small businesses and venture capital investment.
Disadvantages of a Limited Liability Partnership as a Startup
- The fundamental disadvantage of an LLP is that it is required to file an income tax return and an MCA annual return each year, even if it has no activity. If it fails to do so, it may face severe penalties.
- If a partner wishes to transfer ownership rights, he or she must seek the permission of all partners.
- There must be at least two members in a limited liability partnership. If one of the partners decides to quit the partnership, the LLP may be forced to dissolve.
- It is vital to remember that FDI in LLP is only permitted with the Reserve Bank of India’s prior sanction (RBI).
Final Words
LLP- Limited Liability Partnership is deemed easier to set up, has fewer hassles in day-to-day operations, and has substantially lower cumbersome compliance requirements and expenditures, and thus many see it as advantageous to start their firm in this manner. Get your LLP registration done with Tax HelpDesk along with amazing income tax consultation and other income tax and gst related services.