LLP registration is an alternative business vehicle to carry out business. It combines the characteristics of a private company and a conventional partnership. LLP formation provides limited liability company status to its partners. Also offers the flexibility of internal arrangement.
LLP Incorporation needs 2 Designated partners. Each partner requires to deposit a contribution reflected in the LLP agreement. An LLP can have an unlimited number of partners. Also, an audit up to a turnover of 40 lacs is not needed as per the LLP Act.
It is most suitable for small to medium-scale businesses. This combination will give entrepreneurs and businessmen a more structured business vehicle. Limited liability partnership registration combines the advantages of the Company and Partnership.
A partner is not liable for another partner’s negligence. LLP has fewer compliances under the Act. LLP formation offers simple and flexible procedures for management. It has less compliance in comparison to other entities.
LLP Agreement manages flexibility in Limited Liability Partnership. LLP Act, 2008 will govern the LLP in the absence of an LLP agreement. LLP registration is a complete online procedure.
A LLP is a separate legal entity. LLP partners assumes limited liability only as per the law.
A LLP is a good option to generate fundings from bank or investor against profit sharing.
LLP act governs the Limited liability partnership. LLP credibility is much more as compared to other unregistered entities.
There is no limit on number of partners in a LLP. One can appoint any number of partners.
LLP have less compliances as compared to companies. LLP agreement governs the Limited liability partnerships.
LLP incorporation is easy with less documents. Fewer compliances in ROC.
|Sl. No.||Particulars||Partnership||Private Limited||LLP|
|1||Foreign Participation||Foreign National cannot be the partners in a Partnership firm.||Foreign national can be a member in a Company.||Foreign National can be a partner in a LLP.|
|2||Tax Liability||Taxed at 30% plus surcharge and cess as applicable.||Taxed at a rate of 30% plus Surcharged education cess||Taxed at a rate of 30% plus education cess|
|3||Transfer of Shares||Not Applicable||Ownership is easily transferable by the way of transfer of shares.||Transfer are governed by the LLP agreement.|
|4||Annual Filing||No return is required to be filed.||Returns is required to be filed with ROC every year.||Returns is required to be filed every year.|
|5||Audit of accounts||Required to have tax audit of their accounts.||Required to get their accounts audited annually.||Having turnover less than 40lacs or contribution less than 25 lac in financial year required to get their accounts audited annually.|
|6||Rights/Duties/ Rights/Duties/ obligation of the partners/Managing Partners/ Directors||Governed by Partnership deed.||Governed by AOA and resolutions passed by shareholders or Directors.||Governed by LLP agreement.|
|7||Registration||Registration is optional.||Registration with ROC is required.||Registration with ROC is required.|
|8||Cost of formation||Nominal cost of creating a firm.||Minimum government fee for incorporation of private company is 6,000-7,000 approx/-||The cost of formation of LLP is lesser than the formation of company.|
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