In this article we let you know about Advantage of LLP.If you want to incorporate your business with less formality and after formation of company you want less compliance then you should include your business as an LLP. An LLP does not have the limit of minimum contribution in the capital and also it requires only 2 members for forming an LLP.
What is LLP?
Limited Liability Partnership (LLP) is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. An LLP can sue or be sued. The LLP can continue its existence irrespective of changes in partners. There are many advantages you can take from an LLP.
Here advantages are given below:
Advantages of LLP
There are so many advantages of LLP. Some of advantages are given below:
An LLP is a separate legal entity
LLP is a separate legal body; it can buy assets and, it can sue and be sued. No partner will be liable for other partner’s misconduct or negligence.
In LLP, the liability of the partner is limited. Personal Assets of the partner are protected from any liability of the LLP unless fraud has been detected.
Lower registration cost
An LLP can be registered at a lower price as compared to other companies registration. You can register your business as LLP if you want a lower registration cost.
No requirements of compulsory audit
In the case of LLP, there is no mandatory requirement for verification. It is a big advantage for an LLP. An LLP is required to file audit only if the contributions of the LLP exceeds Rs. 25 lakhs or the annual turnover of the LLP exceeds Rs. 40 Lakhs.
An LLP is not required to pay tax on the income of share of its partners. It is a big benefit for any business. If you are forming your company as an LLP, then you get benefits from Tax Laws. Partner will liable to pay their income tax only.
No limit on Partners
You can form your LLP with 2 partners as it is required 2 partners, but there is no limit on the maximum number of partner; you can add partners in your LLP as many you want. There is no limit on partners as compared to a private limited company.
Easy to start
If you’re going to form your business, then you can choose LLP because it is easy to start. Formation of an LLP is very easy as it is required only 2 partners. And the process of making an LLP is easy.
No requirement of Minimum Contribution
There are no minimum capital requirements in LLP so you can form your business easily. It is a great advantage for small business. The contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefits to the LLP.
A written agreement between the members determines the operation of the partnership and the distribution of profits. This may allow for greater flexibility in the management of the business. Partners can draft their agreement with regard to their rights and duties.
Less compliance required
If we compare with the Private limited company, then an LLP requires less agreement. As you now that if there is less compliance, then it will help your LLP. An LLP is required to submit an Annual return and statement of accounts. Whereas in the case of private limited company there are many regulatory formalities required.
DDT not applicable
Dividend Distribution Tax is not applicable to the LLP. A partner can easily withdraw profits of an LLP. Whereas, in the case of a company, the owners have to pay DDT at 15%.
An LLP has perpetual succession. The LLP shall continue to exist until its wound up in accordance with the provision. An LLP not affected by the death of the partner.
Easy to wind up
An LLP is easy to wind up. From the incorporation of an LLP to Winding up all procedure is easy.
Conclusion for Advantages of LLP
As you can see that there are many advantages to an LLP. These above-given advantages will help you in your business. An LLP is a separate legal entity and liability of a partner is limited; it has perpetual succession, so these are the highlight of LLP. If you want to form a business, then you should choose LLP because of its advantages.