Limited Liability Partnership
Limited Liability Partnership is a partnership in which some or all partner (depending on the jurisdiction) has limited liabilities. LLP is governed by LLP Act, 2008. It is a combination of partnerships and company. In LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. LLP is treated like any other partnership firm.
Advantages of Limited Liability Partnership:
Separate Legal entity
- LLP is considered as a separate legal entity and the partners and LLP are distinct from each other. It is like a company where members are different from the company. It can own property in its own name and can also incur debts. The partners have no liability to the creditors of the LLP.
Minimum Capital not required
- In LLP, there is no minimum capital required likewise in case of companies which require a minimum capital to be brought in.
No requirement of Compulsory Audit
- All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement. A Limited Liability Partnership is required to get the audit done only if the contributions of the LLP exceeds 25 Lakhs, or if the annual turnover of the LLP exceeds 40 Lakhs.
- A LLP can acquire, own, enjoy and alienate, property in its own name. No Partner can make any claim upon the property of the LLP so long as the LLP is a going concern.
- Limited Liability means the status of being legally responsible only to a limited amount for debts of a LLP. Unlike proprietorship and partnership, in a LLP the liability of the members in respect of the LLP’s debts is limited.
Easy Exit Plan
- The ownership of LLP can be easily transferred to another person by changing the Managing partners.
FAQ on Limited Liability Partnership:
What are the documents required to start a Limited Liability Partnership?
- PAN Card
- ID-proof (Voter ID/Aadhar Card/Driving License/Passport)-Any 1 of Partners
- Address Proof (Electricity Bill/Telephone Bill/Bank Statement)-Any 1
- For Residential Address:
- Rent agreement along with latest rent receipt (in case premises are rented)
- House Tax Receipts (in case premises is owned)
- Electricity Bill
- NOC from the owner (for format)
Is an office space required to open a LLP?
- No, the LLP can be opened with the residential address also.
What is Digital Signature Certificate?
- Digital Signature Certificate (DSC) is an electronic signature, which is in the form of codes. It is used for signing electronic forms, filed with ROC. It cannot be used in physical forms.
What is Designated Partner Identification Number (DIN)?
- It is a unique identification no. required for a person to become a partner in LLP. A partner after obtaining DPIN shall have to inform the LLP.
What is LLP Agreement?
- LLP Agreement is byelaws or rules based on which important matters like main business of the LLP, capital or meetings is decided. This is a standard legal document prepared by Company Secretaries during registration of LLP.
What is the maximum limit in the no. of partners of LLP?
- There is no maximum limit on no. of partners in LLP as in company which restricts to 200.
Do LLP need to pay tax on Dividend?
- LLP’s are exempt from Dividend Distribution Tax unlike company which has to pay DDT.
Which is the controlling authority for LLP?
- ROC act as the controlling authority for LLP.
Can LLP be converted into private limited company?
- No, LLP cannot be converted into private limited company but a private limited company can be converted into LLP.
Can NRIs/Foreigners work as partners of LLP?
- Yes, NRIs and Foreign nationals can work as partners in a Limited Liability Partnership. They need to obtain a DPIN (Designated Partner Identification Number). But the only condition is that among the other partners there has to be one of Indian origin/national.