Nowadays, LLP is an alternative business firm that is pretty popular among new-age entrepreneurs. A limited liability partnership registration can provide you with a hybrid form of business that gives the advantages of a private limited company (like liability and separate legal entity) and the flexibility of a partnership company. The limited liability partnership (LLP) has come into regulation by the provisions of the Limited Liability Act in 2008.
LLP arrive in India with a new business formation. It has been designed in a specific way that makes the setup easier with no required tax audit obligation, uncomplicated business activities, etc. So, it has become a desirable alternative for business people. It has grabbed popularity amongst SMEs, entrepreneurs, professional service providers and small-scale enterprises because of its tax reduction and burden compliance facilities. Hence, if you want to consider Limited Liability Partnership registration for your organization, here are a few exclusive benefits that are worth contemplating.
- Separate legal entity: LLP has a separate legal entity like the private limited company that is responsible only for the assets they are tied up with. As per the LLP agreement, the LLP partners have limited responsibility for their contribution. Any LLP can file a petition and can be sued on its label. LLPs have the right to put their name into the agreement. Despite the modification in partners, the LLP can remain in its permanent succession. The legal position of the LLP will stay perfect till its existence. Even if the number of partners collapses below the least requirement of two, the LLP will remain in existence for at least six months so that the existing partner gets enough time to bring in a new business partner.
- Partners’ limited liability: In an LLP, every partner’s responsibility is adequate to the scale of the contribution done by them. That means when an LLP is announced insolvent at the closing time, only holdings of the LLP are chargeable for paying off the debts. No personal assets of the partners can be connected to it. Hence, the entrepreneur can work freely as a trustworthy business person and begin a new journey of profits. This is one of the important things that smart entrepreneurs prefer LLP as a desirable form of business structure. In the conventional partnership and ownership firm, individual assets are not secured against failure.
- Easy incorporation: The cost of embracing an LLP is not as much as a private limited or public firm. It is much less in incorporating a Limited Liability Partnership registration. It is one of the major reasons to select LLP for your new company. Entrepreneurs must consider an LLP to value their money.
- Less compliance requirement: For a limited liability partnership, compliance is much easier than the other types of business formations. An LLP has to submit just two types of reports yearly. Those are Form 8 for accounts and solvency statements and Form 11 for annual returns. Besides, compliance regarding board meetings, annual general meetings, arrangements and preservations of minutes of the conferences and board settlements etc., does not request LLP. So, LLP simply relies on its companions for important decisions and votes. Also, it is interchangeable from one to another person with uncomplicated techniques enacted under the LLP rules & acts. A statutory audit is necessary for an LLP when an LLP allowance exceeds more than twenty-five lacs rupees or its turnover is more than forty lacs rupees, under rule 24 of the LLP rules, 2009.
- Easy value withdrawal: The interest of an LLP is only taxed and non-taxable for the partners’ profit. Partners do not have to pay any taxes to withdraw their profits from LLP to their private accounts. And also, there are no extra formalities during profit withdrawals.
- No requirements for minimal funds: An LLP can be structured without a minimum asset for establishment. The resources can be both palpable and impalpable capitals.
- No limitations in business partnership owners: An LLP cannot be formed without a minimum of two business partners. But a limited liability partnership organization can be started with just two participants and there is no limit to the maximum number of partnerships.
- Tax benefits: The partners of the LLP are not responsible to clear taxes for the LLP profits, while an LLP is liable to settle the taxation process. The dividend allocation tax charged while withdrawing benefits is not applied to the partners of an LLP. And, spending included managing the business, such as payments for salary and bonuses are contemplated allowable before totalling the taxes.
- Agreement clauses: Participants have the privilege to regulate various conditions of their LLP agreement. It contains the partner’s rights, responsibilities and obligations of each companion towards the limited liability partnership and also commitments between partners. It also contains sections that bare any operations that may outcome in a disagreement between the companions of the business and between the partners and LLP.
Conclusion
The limited liability partnership (LLP) gives a wide range of benefits to your company that will help you and your business partners to acquire profits. If you are planning to register with an LLP firm, you should find the best llp registration services to get the best advantages from it. It would be the best decision if you choose LLP as the preferred business format to enhance your entrepreneurial ride. It provides a lot more freedom to manage your firm as per your plan and gives your business a great hike. No matter if one of the partners fails, you do not have to face any consequences of that outcome. Hence, it is safe for your assets. Even, if one of your partners suddenly leaves the agreement, an LLP will give you six months to find a new companion to run it again. Online LLP registration is also available and it is much quicker and inexpensive than other models. So, do not waste your valuable time on offline paper works. To give your money the best value and save time, you must go for Limited Liability Partnership registration. Finally, you know the benefits of LLP registration that will help in your business growth.