Key features & advantages
Key features and advantages of LLP
- LLP is governed by The Limited Liability Partnership Act, 2008.
- LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.
- No minimum capital requirement is there. Therefore, the capital required is as per the business need.
- Minimum 2 Partners are required and, unlike a private limited company, there is no maximum cap on the number of partners.
- Unlike the company, cost of incorporation in case of LLP is low.
- LLP is taxed at par with partnership firms and profit share is exempt in the hands of a partner. Further, DDT is not required to be paid on profit distribution to partners.
- No compulsory audit requirement specified unless turnover crosses 40 Lakhs and capital contribution crosses 25 Lakh.
- LLP will have more flexibility as compared to a company and will have lesser compliance requirements as compared to a company.
- The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- Further, no partner is liable on account of the independent or unauthorised actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within an LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
- LLP form is a form of business model which: (i) is organised and operates based on an agreement; (ii) provides flexibility without imposing detailed legal and procedural requirements; (iii) enables professional / technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner.
- Under a “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner. Whereas, under the LLP structure, the liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or unauthorised acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.
- LLP cannot carry on charitable activities.
Documents required
Documents for LLP incorporation
- Director Identification Number (DIN) and DSC for all the Director(s) & Promoter.
- Photo, PAN, ID proof and address proof of all the Designated Partners.
- Application for Name Approval in R.U.N and approval of the same. (Note: Name desired should not resemble the name of an existing registered company and shall not violate the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950.)
- Drafting of documents and filing of e-forms, namely LLP Agreement.
- Proof of office / registered address (property document if self-owned or lease / rental agreement) and latest copies of utility bills.
- Stamp paper for LLP Agreement of the state where LLP is incorporated.
- Brief write-up on the nature of business to be carried on in the proposed LLP.
Ready when you are
Talk to a partner.
A 30-minute call with a partner — no deck, no follow-up email blasts. Just a read on whether we’re the right team to incorporate your LLP.