Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The main advantage of a Limited Liability Partnership over a traditional partnership firm is that in a LLP, one partner is not responsible or liable for another partners misconduct or negligence. A LLP also provides limited liability protection for the owners from the debts of the LLP. Therefore, all partners in a LLP enjoy a form of limited liability protection for each individuals protection within the partnership, similar to that of the shareholders of a private limited company. However, unlike private limited company shareholder, the partners of a LLP have the right to manage the business directly.
LLP is one of the easiest form of business to incorporate and manage in India. With an easy incorporation process and simple compliance formalities, LLP is preferred by Professionals, Micro and Small businesses that are family owned or closely-held.
Limited Liability Partnership (LLP) is a popular and well known business structure in the world. Corporate Customers, Vendors and Govt. Agencies prefer to deal with LLP instead of proprietorship or normal partnerships. LLP is easy to manage and statutory audit is not required for Limited Liability Partnership. LLP is most ideal for small enterprises. Tax Audit is also not required for LLPs with capital less than Rs. 25 lac and turnover not exceeding Rs. 40 lac. LLP is a separate legal entity that gives the benefit of limited liability of company plus the flexibility of partnership, wherein no partner is held liable on account of others partner misconduct and their rights and duties to be governed by LLP agreement. Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008.
Ans: An LLP is a new form of business which is basically a partnership firm but with limitation on the liability of the partners of the LLP. A LLP is considered as a separate legal entity, perpetual succession, with liability of partners limited to the capital being contributed by them. Hence, a shareholder is not personally liable for the debts of the company.
Ans: For small businesses working in the form of LLP audits are not necessary till the turnover crosses 40 Lac or the capital crosses 25 lac.
Ans: The process of LLP registration is elaborated in another tab on this page.
Ans: Any individual can become a designated partner or partner in a Limited Liability Partnership Firm. For becoming a designated partner or partner, no professional or educational qualification is required.
Ans: Any person intending to become designated partner in a LLP must apply for director identification number, it is issued by the Ministry of Corporate Affairs. Proof of identity and address is required to be submitted along with requisite fee while submitting the application for DIN. If the documents are in order, the DIN is approved within 3-4 days. The approved DIN is valid for life and the same DIN can be used by the director, even if he/she has directorship in more than one company.
Ans: The designated partner(s) has been entrusted with the responsibility of managing the LLP in the best efficient manner. A designated partner is liable for misconduct or fraud or if found guilty of default.
Ans: A registered office is required to hold meetings, for keeping records and receiving correspondence from all the statutory/government authorities. The registered office does not have to be necessarily owned by the company, it can be on rented premises also. The registered office of the company determines its jurisdiction for registration, for instance, a LLP with registered office in Delhi will come under the jurisdiction of Registrar of llp, Delhi.
Ans: Yes, A LLP can change its registered office any time after following specified procedure. The changed address can be situated within the same state or in a different state from the state in which it was originally registered.
Ans: Yes, A LLP can be set up following provisions of LLP Act, 2008
Ans: As said before, the biggest advantage of starting a business with LLP form of organization is the outlook by all outside parties towards the business. Though the decision of whether to set up the business as a Limited Liability Partnership or not, rests upon you, but it is advised that the entrepreneur closely evaluate all the merits and demerits.
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