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.