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….

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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.

Disadvantages:

  • 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.

 

 

IMPORTANT

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).

DOCUMENTS:

  • MEMORANDUM
  • AGREEMENT (LLP) Same as AOA.

PROCEDURE:

  • Decide Partners and Designated Partners.
  • Obtain DIN and DSC.
  • Name availability
  • Drafting
  • Filing of incorporation Forms
  • Certificate of Incorporation.

ACCOUNTS:

  • 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.