Easy and Online
As compared to a private company, the number of compliances are lesser in case of LLP. It is very easy to form LLP, as the process is very simple as compared to Companies and does not involve much formality. There is less paperwork as incorporating a LLP can be done online and the LLP is formed in much lesser time.
There is no minimum capital requirement to form a LLP. An LLP can be formed with least possible contribution. Moreover, contribution can also be in the form of tangible or intangible property or any other benefit to the company.
As compared to other body corporates, LLP has lesser compliances to be done. Unlike other body corporates, it is not mandatory for LLP to get its books of accounts audited.
As the name suggests, liability of the owner is limited. LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Separate Legal Entity
LLP is a body corporate and a legal entity separate from its partners. It will have perpetual succession. Irrespective of the changes in the partners, the LLP shall continue to exist as a separate business entity. It shall continue to exist till it is formally wound up, liquidated or by any other means shut down.
LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. This enables third parties to build trust in the LLP as compared to partnership and proprietorship firms.
Unlike limited companies, there is no limit on the number of partners in a LLP. To incorporate a LLP minimum requirement of partners is 2 however there is no maximum limit.
- Renowned and accepted form of business worldwide
- Body corporate can be a partner of an LLP
- LLP is treated on a par with partnership firms for income tax purpose, thus it is not required to pay Dividend
- Distribution Tax like companies
- LLP will have more flexibility as compared to a company
- Operates on the basis of an agreement
- Provides flexibility without imposing detailed legal and procedural requirements.
CA Ruchi Shah
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