What is LLP Registration
What is Limited Liability Partnership?
Limited Liability Partnership Registration governed by the Limited Liability Partnership Act 2008, is a partnership where its owners enjoy limited liability and does not require a lot of maintenance. In case, such a type of company is defaulted, the banks / creditors can only sell the company’s assets and not the personal assets of the directors. The partners / owners of a limited liability partnership firm would not be held accountable or liable for the other partner’s misconduct. The intention behind introducing such a partnership is to provide a simple kind of business organization which is not difficult to maintain but also provides an advantage of having limited liabilities.
Now, let us look at some of the major advantages of a Limited Liability Partnership.
Advantages of a Limited Liability Partnership
Listed below are the benefits of a Limited Liability Partnership:
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Uninterrupted Existence
Until a Limited Liability Partnership firm is bought to terms of dissolution by mutual agreement within the partners, a Limited Liability Partnership enjoys continued existence or perpetual succession.
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Separate Legal Entity
Established under the Limited Liability Partnership Act 2008, a LLP is a legal entity and a juristic person. In a Limited Liability Partnership, the partners are distinct from the entity. The partners in such a company can see each other and can also get sued for any misconduct.
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Easy Transferability
In a Limited Liability Partnership, the ownership can easily be transferred from one person to another. If the ownership needs to be transferred, the partner needs to induct them as a designated partner of the Limited Liability Parntership.
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Audit Not Required
Owners or entrepreneurs whose turnover is not more than 40 lakhs and capital contribution of less than 25 lakhs would need to get their accounts audit done. Ideally, start-ups or small businesses who do not want to start operations abiding to stringent regulatory compliance can initiate business with Limited Liability Partnerships.
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Limited Liability
Being legally responsible to only a limited amount for debits is one of the biggest merits of a Limited Liability Partnership. In case of insolvency and bankruptcy the liability of the LLP’s debts is limited unlike that of proprietorships and partnerships.
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Owning Property
Being a separate legal entity, a Limited Liability Partnership can have its own property. The partners of a LLP cannot claim upon the property as long as it is a going concern.
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Easy Closure
A Limited Liability Partnership is not only easy to initiate, but can easily be closed too. Unlike a Private Limited Company which takes almost a year close down, a LLP can cease or end its business within two to four months.
Conclusion
A LLP can become partners with any individual or organization which can include foreigners or Non Residential Indians. For an individual to become a partner, he / she should be of 18 years or above holding a valid PAN card. The government has formulated several laws and policies favouring businesses helping them to evolve and contribute towards the betterment of the economy.
