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COMPANY TO LLP [F]

Limited Liability Partnership

An LLP is a unique form of legally recognized business vehicle, which integrates flexibility of a traditional partnership firm with the advantages of Separate Legal entity. As it contains the features of both Company and Partnership, it is rightly been called the HYBRID Entity.

LLP is governed by Limited Liability Partnership Act, 2008 which came into force on 1st day of April 2008. This Act was introduced with the idea of promoting MSME Sector (Micro Small Medium Enterprises) with the advantages of self governance and less compliances.

  1. The important advantage of an LLP is that an LLP is easier to start and manage and the process has lower formalities.
  2. It has a low cost of registration as compared to a Company.
  3. LLP is seperate body .
  4. LLP has no minimum requirement for capital.
  5. The partners would have limited liability to their agreed contribution in the LLP.
  6. No requirement of compulsory Audit.
  7. Annual compliance is lesser than companies.
  8. Non-applicability of MAT.
  9. Profits can be distributed without any cost of Distribution Distribution Tax (DDT).
  10. Audit not mandatory.
  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition 
  1. There is no security interest in its assets subsisting or in force at the time of application
  2. The partners of the LLP to which it comprise all the shareholders of the Company and no one else.
  3. No e Forms should be pending for payment or processing in respect of the Company.
  4. No open (unsatisfied) charges should be pending against the Company.
  5. At least one balance sheet and annual return should have been filed by the Company after its incorporation

All about Limited liability partnership

Limited Liability Partnership

LLPs are in law regarded as ‘bodies corporate’ and are subject to aspects of company law, but for tax they will generally be treated as ‘partnerships’. The members provide working capital and share any profits. Members who are individuals will be liable to pay income tax under self assessment, and self-employed Class 2 and Class 4 National Insurance contributions. Members who are companies will be liable to pay corporation tax on their share of profits.

The members of an LLP have limited liability, but the LLP is liable for all its debts to the full extent of its assets. To the extent that the members have contributed to those assets, a member risks losing that amount should the creditors claim those assets.

An LLP has unlimited capacity which means that third parties need not be concerned about any restrictions or activities.

Disadvantages of  the Limited  liability  partnership

Inclusion of Indian Citizen as a Partner – An NRI/Foreign national who wants to incorporate an LLP in India shall have at least one partner who is an Indian citizen. Two foreign partners cannot form an LLP without having one resident Indian partner along with them.

Transfer of Ownership –If a partner wants to transfer his/her ownership rights then he/she has to obtain the consent of all the partners.

Filing of various returns – Public disclosure is the main disadvantage of an LLP. An LLP must file Annual Statement of Accounts & Solvency and Annual Return with the Registrar each year. Income Tax Return must also be filed to the Income tax department for the LLP.

Number of partners –A limited liability partnership must have at least two members. If one member chooses to leave the partnership, the LLP may have to be dissolved.

Non- recognition – LLPs are limited by state regulations due to which they are not given due recognition in every state as a business structure.

Huge penalties –The cost of non-compliance of procedural matters such as late filing of e-forms is very high which would lead to huge sum of penalties owing to Rs.100 for every day till the time the offence of late filing continues.

Basic

INR 1,500/-

One Time Fee

  • GST Registration
  • MSME Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 11,999/-

One Time Fee

  • GST Registration
  • Shop & Establishment Registration
  • MSME Registration
  • Trade Mark Registration
  • Logo Design
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

  • Yearly GST Compliances
  • Income Tax Return

Services Provided Before the Due Date

Frequently Asked Questions

 A company may apply to convert into LLP only if-

  • All the assets of the company are charge free at the time of filing of application for conversion; and
  • All the shareholders of the company must become partners of LLP.

For conversion of Company into LLP, provisions of following Section, Rule and Schedule shall be complied with:

  • Section 56 of the LLP Act, 2008;
  • Rule 39 of LLP Rules, 2009 and
  • Schedule 3 of LLP Act, 2008.

Yes, Consent of all the creditors is mandatory for conversion of Company into LLP.

Yes, Consent for conversion of all shareholders is mandatory.

Yes, the LLP shall within 15 (Fifteen) days from the date of conversion intimate about such conversion to the registrar of companies in Form-14.

Every official correspondence of the LLP bears the following for the period of 12 months:

(a) a statement that it was converted from a private company into a LLP w.e.f……… (Date of Conversion); and

(b) the name and registration number of the company from which it was converted.