Limited Liability Partnership (LLP) introduced in 2008 is a prominent legal business structure in India having fewer legal compliances, as the name suggests LLP limits the liability of its partners & lends protection from the incompetence or misdeeds of the other partners. LLP registration is one of the simplest forms of business to incorporate and manage in India.
Also, LLP is less expensive to incorporate and maintain than a Private Limited Company & serves as a better option from a tax perspective.
LLP company registration is preferred by Professionals, Medium and Small businesses due to the simple incorporation procedure and lesser compliance formalities. LLPs are incapable of issuing equity shares, It should thus, not be used for any business that requires raising equity funds during its existence.
In a Partnership, partners are personally liable for all their debts, if it is not repaid by the business, the partners would have to sell their personal assets. But with an LLP company registration, only the invested capital in commencing the business would be lost, the personal properties of the partners would be safe.
An LLP is a business entity having perpetual succession that means continued existence until it is legally dissolved or wound up. LLP is unaffected by the death or removal of any Partner as it has a separate legal identity. Thus, an LLP continues to exist irrespective of the changes made in ownership.
The ownership can be easily transferred to another person by the introduction of a new partner in the LLP registration. Since it is a separate legal entity, changing the Partners, won’t change the ownership of the LLP.
LLP registration in Mumbai is most suitable for startups and small businesses that are commencing their operations and wish to have minimal legal compliance related formalities. It does not require an audit if it has a turnover of less than Rs. 40 lakhs and capital contribution less than Rs.25 lakhs. It thus has fewer structural changes than a private limited company.A private limited partnership offers legal protection to its shareholders but restricts its ownership. It is relatively convenient to manage and run the company with a possibility of expansion for growing companies. Also, it is easy to dissolve and wind up the company.
A private limited partnership offers legal protection to its shareholders but restricts its ownership. It is relatively convenient to manage and run the company with a possibility of expansion for growing companies. Also, it is easy to dissolve and wind up the company.