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PARTNERSHIP into 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.
  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition 

Minimum Requirement to Start A LLP

  1. Members: Two people are needed to register the LLP. However, there is no limit on maximum partners.
  2. No Minimum Capital: Capital in case of LLP is depending on the need of the business and contribution to partnership by partners. The Stamp Duty on the deed is based on the amount of capital.
  3. Resident Person requirement: One Designated partner of LLP must be from India.
  4. Name: Name of the LLP should be different, and it must not be same or similar to the name of any other company, LLP or trademark which is registered or applied for.

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

Any individual/organization can become the partner of LLP including oreigners /NRI’s

No. For any licenses, permits, registrations, properties, approvals, etc., belonging to prior Partnership Company, the newly formed LLP must follow the required procedures with concerned authorities to transfer the assets.

legalsuvidha.com can incorporate an LLP in 14-20 days. The time taken also depends on relevant documents provided by the applicant and the speed of approvals from the government. To ensure speedy registration, please pick a unique name for the proposed LLP and make sure you have all the required documents before starting the registration process

The LLP shall ensure that for twelve months commencing not later than 14 days after the date of registration, every official correspondence of the LLP bears the following:

• A statement that it was, as from the date of registration, converted from a firm into LLP
• The name and registration number, if applicable, of the firm from which it was converted

The main advantage is that in an LLP, there are fewer formalities after the business has been incorporated. For example, you need not file annual returns, etc. unless your income crosses a certain limit. An LLP is preferable if you are offering professional services, like a lawyer or architect. A Pvt. Ltd. The company is preferred if you want to launch a scalable enterprise

Once the procedure to convert Partnership to LLP comes to complete and the registrar provides the certificate of registration, the firm must follow the rules and regulations as applicable to LLPs.