INTRODUCTION
LLPs are becoming more popular among entrepreneurs because they combine the advantages of partnership firms and corporations into a single company structure.
In 2008, India introduced the concept of Limited Liability Partnerships (LLP). Limited Liability Partnerships are the same as partnerships and corporations. In India, the LLP act of 2008 regulates LLPs. For an LLP to be registered and formed, at least two partners must be involved. An LLP may have as many partners as it wishes, but there is no upper limit.
There should be at least two individuals as partners, and at least one of them should reside in India. LLP agreements govern the rights and obligations of designated partners. They are directly responsible for the compliance of all the provisions of the LLP Act, 2008 and provisions specified in the LLP agreement.
FEATURES OF LIMITED LIABILITY PARTNERSHIP
- LLP like companies has their own legal entity.
- Each partner’s responsibility is restricted to the amount of his or her contribution.
- Creating an LLP is inexpensive.
- There are fewer rules and regulations to follow
- There is no minimum capital contribution requirement.
An LLP must have at least two partners to be formed. The maximum number of partners in an LLP is unrestricted. There should be a minimum of two specified individuals among the partners, and at least one of them should be a resident of India.
The LLP agreement governs the rights and responsibilities of chosen partners. They are personally responsible for ensuring that the terms of the LLP Act 2008 and the LLP agreement are followed.
BIGGEST ADVANTAGE OF LLP
An entity with its own legal status
An LLP, like a corporation, is a separate legal entity. The LLP is not the same as its partners. A limited liability partnership (LLP) can sue and be sued in its own name. The contracts are signed in the name of the LLP, which aids in gaining the trust of numerous stakeholders and instilling confidence in the business among consumers and suppliers.
The partners’ liability is limited.
The LLP’s partners are only liable to a certain extent. The partners’ responsibility is restricted to the amount of money they put in. This implies individuals are just responsible for the number of contributions they made and are not personally liable for any business losses. If an LLP is insolvent at the time of its dissolution, only the assets of the LLP are responsible for paying its debts. The partners are free to operate because they have no personal liabilities.
Cost-effectiveness and lack of compliance
In comparison to founding a public or private limited company, the expense of forming an LLP is modest. The LLP’s compliance to be followed is similarly low. Only two statements are required to be filed yearly by the LLP: an Annual Return and a Statement of Accounts and Solvency.
There is no minimum capital contribution requirement.
There is no minimum capital requirement for forming an LLP. Before incorporating, there is no requirement to have a minimum paid-up capital. It can be founded with whatever amount of capital that the partners contribute.
Read More : https://virtualauditor.in/learn/company-registration-bangalore/
