Limited Liability Partnership
The Limited Liability Partnership formation combines the advantage of Partnership Firm and Corporate Legal entity under Companies Act, 2013. It is easy to form and easy to dissolve unlike in case of a Corporate entity. Simultaneously, the law ensures the distinct entity to Limited Liability Partnership. The partners in the case of Limited Liability Partnership are not liable for the actions of other partners. The Financial Liability of each partner in the case of Limited Liability Partnership is limited to the extent of the financial contribution brought in by him in the firm.
Unlike in the case of Companies, the expenses for starting a limited liability partnership are minimal and subsequent compliances provisions are relatively lesser.
How to form a Limited Liability Partnership – Documents Required
- Digital Signature Certificate of the Proposed Partner
- Designated Partners Identification No. or Directors Identification Number
- Application for Name Approval
- Incorporation Documents along with Address Proof for Proposed Place of Business
- Limited Liability Partnership Deed
- PAN Card of Partnership Firm
- Statutory Registration e.g. MSME/GST/TAN etc.
- Open a Current Account in the name of the LLP
- Start Doing Business
- Easy to Start as its incorporation formalities are lesser than companies
- Exemption to Audit in case of small sized entity i.e. Turnover less than Rs. 40 lacs and Capital Contribution less than Rs. 25 lacs
- The Partners in LLP are not responsible for the act of another partners unlike in case of ordinary partnership
- No minimum requirement of Capital.
- Perpetual Status of Limited Liability Partnership unless it is wound up by Partners.
- No Dividend Distribution tax on payment of profit to its partners.
- Relatively Difficult in accessing the External Finance in the form of Debt and Equity as compared to Company as Limited Liability Partnership can not issue shares to its investors.
Ideal for Whom
- Generally for Professional set-up organization desiring to form an association with like-minded people on a profit-sharing basis.