limited liability partnership

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.