LIMITED LIABILITY PARTNERSHIP ( LLP ) :
Limited Liability Partnership (LLP) is a type of partnership where the liability of Partners is limited with appeasement advantages to carry on the business across the country in gratification environment….
Let’s discuss its Advantages and disadvantages:
Advantages of Limited Liability Partnership ( LLP ):
- This is a type of business MODEL which take its existence with Legalized Agreement i.e. LLP Agreement.
- One can work in gratification environment as joint liability due to other partner’s wrongful or misconduct will not harm any individual partner if not in default.
- More flexibility and less compliance in compare to other business model.
- Simple registration procedure without any minimum requirement of capital and on restriction on maximum limit of partners.
- Easy ENTRY and Exit for partners.
- Limited Liability Partnership is a juristic person and can be sued for its name and sued by others, partners are relaxed from this end.
- If in case of fraud partners personal assets will be fetched to settle the accounts of LLP.
- Limited Liability Partnership agreement is not mandatory but in absence of LLP the mutual rights and liabilities will be decided as per SCHEDULE I of LLP Act.
- LLP will be in danger on the act of one partner without obtaining the consent of other partners.
- Investment not allowed by public.
- As we know LLP is a mixture Model of business so compliance with rules and regulation is on higher note.
- Winding up is a major issue in case of Limited Liability Partnership (LLP) because of its very lengthy and expensive procedure.
FORMATION OF LLP :
- Two or more person can form an Limited Liability Partnership (LLP ).
WHO CAN BECOME PARTNERS IN LLP ?
- Limited Company
- Foreign Company
- A LLP
- A foreign LLP
- A NON- Resident can be a partner in Limited Liability Partnership (LLP).
- AGREEMENT (LLP) Same as AOA.
- Decide Partners and Designated Partners.
- Obtain DIN and DSC.
- Name availability
- Filing of incorporation Forms
- Certificate of Incorporation.
- Books of accounts shall be prepared and maintain and required to submit a statement of accounts and solvency within 30days from the end of 6months of the financial year.
- Within 60days from the end of financial year required to file annual return.
- Mandatory Auditing of Books of Accounts if the turnover exceeds 40lakhs or contribution exceeds 25lakhs.
- Revised Schedule not applies on the Limited Liability Partnership as it is Body Corporate not a company.
IMPLICATION OF TAX PROVISIONS:
- In relation to Tax Provision Limited Liability Partnership = Partnership.
- Limited Liability Partnership ( LLP ) is liable for making tax payment.
- Remuneration Deduction allowed in the hand of LLP u/s 40(b)
- Remuneration to partners will be treated for tax in the heads of “INCOME and PROFESSION”
- Share of profit of Partners is exempted under section 10(2A)
- Benefit in relation to Presumptive taxation is not provided to Limited Liability Partnership ( LLP).
- For Service Tax LLP is Partnership.