Business Tips

8 Advantages of Registering a Limited Liability Partnership


The concept behind a limited liability partnership is a partnership that consists of partners whose liability is limited to the capital invested by the individual for starting the business. 

In an LLP, your business is not liable for the firm’s debts. Moreover, an LLP is a corporate body having a legal entity self-governing of the partners that are a member of the organization.

So LLP Registration is very useful to start any business and also profitable. In this article, we will see the advantages of LLP Registration and all other details of it. So without getting away from the topic, let us know what the characteristics of LLP are.

A few characteristics of the LLP Formation

  • Separate legal entity: Like a company structure, the partners and the LLP are different. The LLP uses a separate legal entity like a company where partners are other from the company.
  • The addition of foreigners: According to the Act, foreign nationals, including international companies, can be fused to form an LLP in India. For this purpose, you will need at least one designated person must be a resident of India.
  • No minimum money required: A minimum amount of money is necessary in order to start a company, but not an LLP.
  • A minimum number of members: A minimum of two members are required to begin an LLP. However, there is no upper limit set for the maximum number of partners in LLP.
  • No compulsory audit required: the audit in case of LLP is not mandatory, unless: If the participation of the LLP passes 25 lakh rupees. Suppose the turnover of the LLP gives 40 lakh rupees annually.

Advantages of Limited Liability Partnership (LLP)

  • Easy to form: One of LLP’s main benefits is that the process of creating an LLP is comfortable and not time-consuming like that of a company.
  • Liability: As mentioned above, the partners have limited liability, which means they are not liable to pay the company’s debts from their assets. No partner can be held answerable for the control of other partners.
  • Easy transferability of ownership: The shift of ownership is easy, as it is easy to admit or leave an LLP partner. There are no limitations upon entering and exiting partners in LLP.
  • Perpetual succession: According to the Act’s provisions, the LLP will not be folded up in case of death, retirement, or bankruptcy of a partner. The life of the LLP is not influenced by the same.
  • Taxation: The percentage of taxation is less than that of other companies. Moreover, the tax is levied on the LLP, and the partners would be released from the tax. The Income tax returns must be signed and validated by the partner or partners as the case may be. 
  • No compulsory audit is required: Every business has to appoint an auditor to check internal management and accounts. The audits are not needed except for the exemptions mentioned above.
  • An LLP is organized and operates based on the agreement.
  • Flexibility is implemented in this form of the business model without forcing detailed legal and procedural specifications.
  • The LLP enables professional or technical expertise such that the firm’s financial risk-taking capacity is handled efficiently.
  • Raising funds and utilizing them depends upon the will of the partners.

Disadvantages of LLP

Inability to raise VC funding: VCs would be reluctant to put resources into an LLP structure. This is because all ‘investors’ in an LLP must be accomplices, which have specific duties toward the element. No VC needs any of these duties and would, accordingly, just put resources into a private restricted organization.

Rights of partners: A LLP can be organized so that one accomplice has a larger number of requests than another. So is anything but one vote for each offer framework. Some lesser accomplices may feel bargained along these lines if higher investors decide to move the business toward a path that influences their inclinations.

Process of LLP Registration

LLP formation process, as defined by the Ministry of Corporate Affairs, is:

  1. Apply for Designated Partner Identification Number (DPIN), which is essential in this process.
  2. Obtain a digital signature certificate and register it on the portal.
  3. The name of the LLP has to be approved by the Ministry. Name selection and approval are considered one of the most challenging jobs due to the rules defined for the same. 
  4. Once the LLP name is confirmed, one can proceed with LLP registration.

However, if you want to register your business as LLP, then you will need to find the best provider of Company Registration Services as they will know the in and out of the registration process. They also have an idea about each and every registration process, and no one is best than when it comes to Company Registration Services. So for what you are waiting for, pick your phone and book your appointment now. 

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