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Limited Liability Partnership

Earlier, when two or more than two people want to start a business, they have two options: either they can form a Partnership firm or set up a Pvt Ltd. company. Both these modes of starting a business have their advantages and dis-advantage. Limited Liability Partnership enjoys the flexibility of a sole proprietor firm and the benefits of a Pvt. Ltd. company. LLP companies are governed by the LLP Act 2008.

Salient Features of an LLP

  • It is registered with ROC, the same as a Pvt Ltd. company.
  • Minimum two partners aka directors are required for an LLP
  • No limit on the max number of partners.
  • Foreign partners can also be a part of an LLP.
  • Perpetual Succession
  • Liable to audit if the turnover exceeded 40 lakhs.
  • Liable to audit if the capital exceeded 25 lakhs.

Advantages of an LLP

  • The liability of partners is limited.
  • No requirement of minimum contribution (paid-up capital).
  • Lesser compliance.
  • Lower registration cost.
  • No requirement for a compulsory audit.

Disadvantages of an LLP

  • Inability to have Equity Investment.

Document required for an LLP

  • Director Identification Number (DIN)
  • Digital Signature
  • KYC documents of all the partners
  • Ownership proof of the registered office
  • LLP Agreement

Who should start an LLP company

  • If professional partners want to start a business together
  • You want to avoid lots of compliance with a Pvt. Ltd. company.

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