Introduction :

Limited Liability Partnership (LLP) is a popular and well-known business structure in India. The concept of Limited Liability Partnership (LLP) was started in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners overview With an easy incorporation process and simple compliance formalities, LLPs are preferred by Professionals, Micro and Small businesses that are family-owned or closely-held. Since LLPs are not capable of issuing equity shares, LLP should not be chosen for any business that has plans for raising equity funds from Angel Investors, Venture Capitalist or Private Equity Funds LLP is a separate legal entity that gives the benefit of Private Limited company plus the flexibility of partnership Firm, wherein no partner is held liable on account of others partner's misconduct and their rights and duties are governed by LLP agreement. LLP can also become a member in another Company.

Features :

• Separate Legal Entity: LLP is a body corporate and separate legal entity from its partners having perpetual succession. It can own assets in its name, sue and be sued.
• No liability for negligence of other partner: The main advantage of LLP is that no partner can be held liable for negligence or misconduct of other partners.
• Limited Liability: Partner’s liability is limited to the extent of agreed contribution (capital) in the LLP Agreement except in case of fraud.
• Perpetual Succession: Unlike a general partnership firm, a limited liability partnership can continue its existence even after the retirement, insanity, insolvency or even death of one or more partners.
• Business for Profit Only: LLP cannot be formed for charitable or non-profit purposes. It is essential that the entity is formed to carry on a lawful business with a view to earning a profit.
• Lower Compliance Requirement: An LLP involves lesser compliance as compared to a private/ public limited company. Unlike companies, compliances elated to board meetings, statutory meetings etc. do not apply to LLPs.
• Audit of accounts from professionals: LLP shall maintain proper books of accounts where audit shall also be required if the capital contribution exceeds Rs. 25 Lakhs or turnover exceeds Rs. 40 Lakhs

Benefits of LLP Registration :

• Lower registration cost: When compared to the expense of forming a private limited or public limited company, the cost of forming an LLP is lower. However, the price gap between forming an LLP and forming a private limited company has narrowed in recent days. Because the shareholders have no personal liability, they are not required to pay the company's liability out of their own funds.
• No requirement of minimum contribution: There is no minimum capital requirement in LLP. An LLP can be formed with the least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefits to the LLP.
• Taxation Aspect on LLP: For income tax purpose, LLP is treated on a par with partnership firms. Thus, LLP is liable for payment of income tax and share of its partners in LLP is not liable to tax. Thus no dividend distribution tax is payable. Provision of "deemed dividend" under income tax law, is not applicable to LLP. Section 40(b): Interest to partners, any payment of salary, bonus, commission or remuneration allowed as deduction.