Limited Liability Partnership (LLP) is business form which provides benefits of limited liability and flexibility of a partnership business. It is governed and registered under the Limited Liability Partnership Act, 2008 and the rules made there under. Small and Medium Enterprises (SMEs) can function as LLP. Indeed, LLP is suitable for trading, service sector especially advisory and professional Service firms, etc.
Requirements for LLP Registration
As per the Ministry of Corporate Affairs (MCA), for LLP Registration, the below conditions have to be met.
Minimum Two People:
Two people are needed for LLP Registration. However, there is no limit on maximum partners in LLP Registration.
No Minimum Capital:
No minimum Capital is required for LLP Registration. Initially, We can register LLP with ten thousand rupees. The Stamp Duty on the deed is based on the amount of capital.
Resident Person requirement:
One Designated partner of LLP must be from India for LLP Registration.
Documents for LLP Registration
Identity Proof of Designated Partners and Partners
Address Proof of Designated Partners and Partners
Proof of Registered office:
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Benefits of LLP Registration
Partners’ liability of the LLP is limited and it is limited only to their contribution by them to the LLP.
Separate Legal Entity:
LLP is a separate legal entity and a juristic person distinct from its partners and both can sue each other and be sued.
Continuity of existence of the LLP:
LLP continue to exist even after the death of the partner.
Minimal regulatory compliance:
Regulatory compliance are very less in case of LLP as compared to company form of entity.
Limited Liability Partnership enjoys the right to own, enjoy and transfer property. The rights can be exercised by the LLP in its own name.
No Audit Requirement:
There is no audit requirement up to turnover of less than 40 Lakhs and capital contribution of less than 25 Lakh.
Transferability of ownership:
The ownership of a LLP can be easily transferred to another person. However, transferee should be inducted as a Designated Partner of the LLP.
Both Partners & LLP can give loan to each other. There is no dividend tax in case of LLP.