Limited Liability Partnership (LLP) Registration
LLP was launched in India by way of the Limited Liability Partnership Act, 2008. The main edge of a Limited Liability Partnership is one partner is not liable for another partner’s misconduct or negligence. LLP is favoured by Professionals, Micro and Small businesses that are family-owned or closely-held.
Limited Liability partnership offers the benefit of limited liability to its owners and at the same time needs minimal maintenance. The owners of a private limited company have limited liability to creditors. In case of default, banks/creditors can only sell the company’s assets and not the personal assets of directors.
Process for LLP registration in India
Benefits of incorporating a LLP
- Limited Liability : The biggest advantage is Limited Liability, which means the status of being legally responsible only to a limited amount for debts of a LLP. Unlike proprietorships and partnerships, in a LLP the liability of the members in respect of the LLP’s debts is limited. The personal assets of the directors are safe if the company goes bankrupt.
- Owning Property : An LLP being a juristic person, can acquire, own and enjoy property in its own name. And this is entirely distinct from its partners. No Partner can make any claim upon the property of the LLP so long as the LLP is a going concern.
- Easy Transferability : The ownership of a LLP can be easily transferred to another person. All you need is to induct them as a Designated Partner of the LLP. LLP is a separate legal entity separate from its Managing Partners, so by changing the Managing Partners, the ownership of the LLP can be changed.
- Audit not Required : Entrepreneurs earning a turnover of less than 40 Lakhs and capital contribution of less than 25 Lakh need not get their accounts audited .Therefore, LLPs are ideal for startups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.
- Continuity of Business : A LLP has ‘perpetual succession’, that is continued existence until it is brought on the terms of the dissolution by mutual agreement within the partners. Partners may come and go, but an LLP goes on.
- Separate Legal Entity : A LLP is a legal entity and a juristic person established under the Act. The partners are distinct from the entity and both can sue each other and get sued in the process.
Pre-Requisites of incorporating a LLP
- Minimum 2 Partners (18 years and above age)
- There is no minimum capital requirement in LLP.
- At least one Designated Partner as Indian Resident
- DIN for all Partners