Want to know about LLP?
LLP is an alternative to corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. LLP is a newly introduced legal entity type in India for small and medium sized businesses. It is capable of entering into contracts and holding property in its own name. Only one partner is not responsible or liable for another partners misconduct. LLP will be operated not according to the company Act, 2013 but according to LLP agreement which is formed during the formation of the Company.
The property of LLP is not the property of its partners. Therefore partners cannot make any claim on the property in case of any dispute among themselves.
Advantages of a Limited Liability Partnership
- Low cost for setting up and running up
- No limit on number of partners
- Easy to establish
- Less Compliance level
Frequently Asked Questions:
Whether other business entities like firm or company would be able to convert themselves into LLP?
Yes, Other entities such as Partnership firm, Private Limited Company, or unlisted public company would be able to convert themselves into LLP’s.
Whether LLP would be able to convert itself into Company?
No, At this stage it is not allowed as per LLP Act, 2008.
Suited best for?
- Persons providing services of any kind
- Small Sector Enterprises (including Micro, Small and Medium Enterprises)
- Producer Companies in Handloom, Handicrafts sector
Are partners required to contribute a minimum capital in an LLP?
There is no necessity or compulsion to contribute a minimum capital for a partner, as per the Limited Liability Partnership Act, 2008 but their should be a profit sharing ratio among the partners.
Who can be Designated Partner?
Only an individual can be Designated Partner and at least one designated Partner should be resident of India.
Whether we need to have DSC (Digital Signature Certificate) for obtaining DIN (Director Identification Number)?
Yes, DIN is online application signed by the applicant himself, for applying the DIN, signature of the applicant is required.
What is DSC (Digital Signature Certificate)?
DSC is the certificate in electronic format of to prove your identity required specially for e-forms or to sign certain documents digitally.
Are all Designated Partners of a company required to obtain DSC?
How is an LLP taxed?
For income tax purposes, an LLP will be treated as a partnership and not as a separate legal entity. This means that an LLP will not be liable to tax at the entity level. Instead, each partner will be taxed on his or its share of the income from the LLP.
Is Audit necessary for LLP?
No, only the Limited Liability Partnership whose contribution exceed Rs. 25 Lakhs or the Limited Liability Partnership whose turnover exceed Rs. 40 Lakhs are required to annually get their accounts audited by any Chartered Accountant in practice.