Exciting Benefits of Limited Liability Partnership
Limited liability partnership is a business alliance where the partners have s limited liability. LLP is a business structure that combines the flexibility of the collaboration and ensures the partners to seek more profit. One of the significant benefits of a Limited liability partnership is, it plays a leading role in protecting the members’ assets, and the partners are not liable for other partners’ liabilities. LLP is well suitable for people who are in the field of the accounts department, architect buildings, consulting agencies, and other areas.
The partners who involved in the partnership activities are the primary beneficiaries. The partners of the firm can get direct ownership through this LLP. But for the companies without LLP, they have to look for other shareholders. Paid-up capital never restricts LLP in bringing the amount to the business. But for the private companies, the paid-up capital may fix up to 1 lakh, which is mandatory.
Limited Liability Partnership was introduced by the partnership act 2000. It mainly provides a partnership with limited labilities. This LLP is popular when professional partnerships would like the benefit of protected liability.
Benefits of Limited Liability Partnership:
In business, LLP has limited liability on the owner and the partners. Thus, making it less risky for the founder and the owner to invest in the firm. This kind of firm requires two partners to start the operations. The profit distributions are determined through proper agreement between the members, which must be well documented. Here are the top nine benefits which help in business registration services for LLP:
1. Low-Cost Registration
The cost incurred for the registration is comparatively low in terms of private companies. It cost around only 800 rupees for LLP registration, whereas other registration costs about INR 6000.
The partners of the firm can get direct ownership through this LLP. However, it doesn’t work the same way for other companies, thus requiring the appointment of shareholders.
3. No Paid Capital
A fixed paid-up capital for private companies is up to 1 lakh, which is mandatory. However, one of the benefits of Limited Liability Partnerships is that there is no mandatory requirement.
4. Non-mandatory audits:
The audit is compulsory for business entities. However, for LLP, it is not mandatory unless it reaches a turnover of above 40lacs or a contribution of 25 lacs in the financial year.
5. Fastest Registration
LLP can be established quickly with lesser legal complications when compared to other companies. However, other companies must produce an incorporation certificate.
6. Partnership in LLP:
LLP does not have any restrictions for the number, never restricts the partners to join. However, private limited companies allow only 50 people as partners. Thus, allowing lesser restrictions compared to any other form of business entity. It also allows foreign nationals to be a partner in the firm. This shows how less government intervention is in this entity.
7. Perpetual Succession:
An LLP can be perpetually succeeded without changing the existing partners of LLP. The LLP can continue to exist with the same entity, unchanged privileges, immunities, and estates. It is by far one of the most significant benefits of making the procedures for entering and exiting of partnership simple. Using LLP agreement the ownership can also transfer.
8. Taxation benefits of LLP:
One of the Limited Liability Partnerships’ best interests is that it is taxed at a lower rate. It also helps to avoid double taxation. This entity is not subjected to dividend distribution tax; hence, there won’t be any tax levied while distributing profit amongst the partners. The partnership can continue as long as the firms are willing to be in the business. LLP can act as a fundraiser by financing the small business like a sole partnership or proprietorship to become its shareholder. LLP can be a regulated entity to attract PE investors and financial institutions.
9. Best Option for SME‘s
It is suitable for small businesses as there is a low tax rate, quick registration, and flexibility. In the partnership, if the owners are willing to withdraw the profits from the concern, then the company needn’t pay extra tax.
The above-stated benefits of a limited liability partnership make it vital for small business owners to adopt the entity. Through this entity, a business owner can also get a foreign investor without the government’s intervention.
All these lucrative benefits of limited liability partnership should make you prefer business registration services and if you are looking for assistance for registering a business, then choose a firm who has complete knowledge about Indian registration entities.