LLP is a form of corporate business vehicle that enables professional expertise and entrepreneurial initiative in order to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability and allowing its members to be flexible for organizing their internal structure as a partnership.
For Limited Liability Partnership advantages and disadvantages are there and one needs to choose wisely which form of business he needs to opt for. In addition, if one does not want to disclose any secret of his business idea he can plan to start a One Person Company.
It requires a minimum of two partners for formation of an LLP. There will not be any limit to the maximum number of partners. It is mandatory for every designated partner to obtain a “Designated Partner’s Identification Number” (DPIN). In comparison to Limited liability Company, LLP is a professional business whereas the former is a small business with few shareholders.
Key Characteristics of Limited Liability Partnership, India
An LLP is a new form of business which is basically a partnership firm but with limitation on the liability of the partners of the LLP. A LLP is considered as a separate legal entity, perpetual succession, with liability of partners limited to the capital being contributed by them.
Minimum two persons or partners are required to form a LLP and can have a maximum of any number of partners.
LLP is formed and governed by Limited Partnership Act, 2008.
The designated partners must be a natural person and have attained 18 years of age. Foreign nationals, foreign companies & LLP can incorporate a LLP in India subject to at least one designated partner is resident in India.
A minimum of two designated members are required to register an LLP. The designated members are responsible for overall operations of the firm.
The designated partner(s) has been entrusted with the responsibility of managing the LLP in the best efficient manner. A designated member is liable for misconduct or fraud or if found guilty by default.
Latest passport size photograph, Identity and residence proof for all proposed directors, registered office address proof. Income tax PAN is mandatory for Indian nationals.
An address is required as registered office of the LLP. It can be commercial/residential/industrial.
The biggest advantage of starting a business with LLP form of organization is the outlook by all outside parties towards the business.
a. Annual return
b. Financial statements of LLP
c. Income tax return filings.
Below is the comparison between Sole proprietorship, Partnership, Private Limited Company, Limited liability partnership, One person company and Public limited company