A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liabilities.
LLP must include at least 2 partners, of which one must be resident of India.
Entrepreneurs find it easy to start and manage an LLP business. LLP Agreements are customized in according to meet the needs of partners concerned. There is fewer formalities in areas of legal compilation, annual meeting, resolution as compared to any other Private Limited Company.
LLP can be started with the minimum amount of capital money. Capital may be in the form of tangible, movable asset like Land, machinery or intangible form.
LLPs are not required to Audit their accounts unless the contribution of LLP exceeds Rs. 25 Lakhs, or, when the annual turnover of LLP exceeds Rs. 40 Lakhs.
LLP have to face less compliance burden as they have to submit only two statements i.e. the Annual Return & Statement of Accounts and Solvency. Thus, saving a lot of cost and time.
Profits of an LLP are taxed at the same corporate tax rate of 30%. However, distribution of profits to partners of the LLP is specifically exempt from tax and hence, there is no tax (equivalent to DDT) in India when the LLP distributes profits to its partners.
An LLP provides significant business advantage to all its stakeholders, customers, employees, partners, vendors or even public at large. Today customers, vendors and investors look for credibility in the businesses they deal with. In case of an LLP, all the information such as name of the firm, date of incorporation, registered office address, status of firm, partners of LLP etc., are made available in a publicly searchable database. This feature makes it easy to authenticate the existence of the business, improving business credibility.
LLP provides limited liability to its partners. LLP is liable to the extent of its assets. Partner’s liability is limited to the extent of agreed capital contribution in the LLP Agreement.
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