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 other’s 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. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to maintain while at the same time providing limited liability to the owners.
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Advantages of LLP registration?
Advantages of LLP:-
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.
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.
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.
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.
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.
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.So it’s entirely a win –win situation for you if you plan to step to head forward with a suffix LLP.
Minimum requirements for LLP registration
Minimum 2 Partners
No Capital Requirement
At least one Designated Partner as Indian Resident
DPIN for all Partners
Documents required for LLP registration
Copy of PAN Card of partners
Passport size photograph of partners
Copy of Aadhaar Card/ Voter identity card
Copy of Rent agreement (If rented property)
Electricity/ Water bill (Business Place)
Copy of Property papers (If owned property)
Landlord NOC (Format will be provided)
What is the minimum number of Partners required to start a Limited Liability Partnership?
At least two partners are required for LLP registration. The maximum partners can be 200. If you are the sole owner, you can register as a One Person Company.
Who can become a partner in LLP?
Any individual/ organization can become the partner in LLP including foreigners/NRI’s. However, the individual must 18+ above in terms of age and should have a valid PAN card.
Can NRIs/Foreign Nationals be a Designated Partner in LLP?
Yes, but only after he has been assigned with DIN/DPIN. However, at least one designated partner in LLP must be a Resident of India. In fact, the foreign director can also be a majority shareholder in the company.
Can I convert my Limited Liability Partnership (LLP) in a Private Limited company?
No, you can’t convert your LLP into a Private Limited Company as it is not MCA. Both the LLP Act, 2008 and the Companies Act, 2013 don’t have any provisions on conversion of LLP in a private limited company. However, if you want to expand your business you can register a new Private Limited Company with the same name as that of the LLP. The LLP company just needs to issue a no objection certificate.