Company formation is the primary step to conducting business. Incorporating a wrong company formation can significantly impact your business. Furthermore, You must know the advantages and disadvantages of each company formation. One of the most famous and beneficial company formation is LLP Company. In this article, we will understand the LLP Registration Advantages and Disadvantages. We will also understand why you would have an LLP Company Registration and the LLP Registration Document Requirement.
What is LLP Company Formation?
LLP(Limited Liability Partnership) Registration or the LLP Company Formation is a form of company incorporation launched in India in 2009. It is the mixture of a partnership firm and a private limited company.
Thus, In LLP Registration, you as a partner get the limited liability as per the capital invested in the business. Furthermore, the personal assets of directors are separate and not liable for the company’s debts.
Similarly, an LLP can even exist when partners get changed thus it provides flexibility for partners. In conclusion, LLP is a separate legal entity and can conduct legal business, contracts, and have legal assets. However, the liability of partners is restricted. It is restricted up to extent of the amount invested in starting the LLP Company Formation.
Requirement for LLP Registration in India
There are multiple reasons why you should have an LLP Company Registration in India.
Some common reasons to choose LLP Company Registration are as follows:
- The minimum requirement of partners is only two.
- Out of the minimum requirement of two partners, only one must be an Indian Citizen
- It is easiest to get LLP Registration
- The individual partner is not responsible for another partner’s mistakes or decisions.
- The LLP Company has a separate legal identity and it can hold separate assets.
- Having an LLP Company Registration provides you the flexibility of choosing the partners,
- There is no limit to choosing partners. It means you can have as many business partners for your LLP Company Registration.
- You can have LLP Registration with minimum capital investment.
- LLP Registration is best suitable for startups as they can start conducting business through minimum requirement and liability.
LLP Registration advantages and disadvantages
The LLP Registration advantages and disadvantages are many. The most important differences of LLP Registration Advantages and Disadvantages are as follows.
|LLP Registration Advantages
|LLP Registration Disadvantages
|No minimum capital investment is required to have LLP Company Registration
|VCs are unwilling to invest in LLP as they will also have to become partners or take responsibilities.
|Furthermore, Partners can contribute through the form of assets including tangible, movable, immovable, or intangible property.
|Even if LLP doesn’t perform any activities, it has to do ITR Filing, and File MCA Annual Returns.
|The minimum requirement of partners is only two for LLP Registration.
|LLP’s Tax Liability is 30% no matter how much is the turnover.
|The maximum requirement of partners is not restricted. You can have any number of partners after LLP Company Registration.
|Although Compliances of LLP are minimal the penalty is high. It can go up to Rs. 5 Lakhs.
|LLP Company Registration fees are quite less as compared to other company formation.
|One partner can have more rights than another so the partners having fewer rights may feel less responsible.
|There are only three compliances per year.
|To transfer the ownership, a partner needs to get approval from all the other partners.
|You can easily get LLP Company Registration Online by providing us with the required documents.
|FDI Investment is permissible only after approval from RBI.
|Tax Audit is required for only after:
|It is easier to wind up an LLP Company.
Document Requirement for LLP Registration
- PAN Card
- Address Proof
- Proof of Identity
To understand the document requirement and preparation for LLP Registration in detail, you can contact our business advisors.
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