7 Advantages of Limited Liability Partnership

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What are the Advantages of LLP

What is an LLP
If you are starting a business as two or more partners, you have many options for registering a company, such as Partnership, Private Limited, public limited and among that LLP is an alternative corporate business entity which gives the benefits of limited liability of a company and the flexibility of a partnership.

How to register a LLP
Step 1: Name Approval
Step 2: Get the Digital Signature
Step 3: Obtain DPIN (Designated Partner Identification Number)
Step 4: Submission of Documents
Step 5: Incorporation of LLP
Step 6: Submission of LLP Agreement

Advantages of LLP Registration

1. Limited Liability:
Limited liability protects the Personal assets of the shareholder from the liabilities that arise out of the business. LLP’s are a separate legal entity to the members.

2. Attract investment from Venture Capitalist
If your plan is to grow your business by attracting funds from venture capitalist, then you can register a LLP because LLP supports funding from venture capitalist and angel investors.

3. No minimum capital contribution required:
Limited Liability Partnership can be formed without investing any minimum Paid Up capital as against Private Limited Company, which requires a minimum of One Lakh share capital.

4. No Audit Required:
A limited liability partnership is not required to conduct any statutory audit until the
annual turnover of the LLP exceeds Rs. 40 lakhs in a financial year.

5. Flexibility.
As compared with the Private Limited or Public limited, the operation of the Limited Liability is easier. The LLP operations and distribution of profits is based out of written agreement between the shareholders.

Dividend Distribution Not Applicable
In the case of a company, if the owners to withdraw profits from the company, additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is payable by the company. However, no such tax is payable in the case of LLP and profits of an LLP can be easily withdrawn by the partners.

Board Meetings: - Partners are not subjected to hold 4 mandatory board meetings as required in once in a year by Companies Act. The partners can meet as per their convenience or need basis. Partners can specify about the meetings details & schedule in the LLP agreement.