What is a “Limited Liability Partnership” or “LLP”?

LLP or Limited Liability Partnership has become a popular form of organization among entrepreneurs in India. A Limited Liability Partnership gives the benefits of a Company & a Partnership Firm. An LLP in India is a Partnership Firm established by at least 2 Partners who enter into an LLP Agreement. However, the LLP Partner has limited liability and the LLP has perpetual succession just like a Company. What are the Features of an LLP in India? The following are the features of an LLP in India: It’s a body corporate & legal entity separate from its members; The members of an LLP have a limited liability, limited to their agreed contribution to the LLP; It has the organizational flexibility of a Partnership; It has a perpetual succession, it continues to exist even after the founding partners leave the organization. All it requires is to have at least 2 partners; Its accounting & filing requirements are similar to that of a Company; Less compliance and regulations; No requirement for minimum capital contribution; At least one partner must be a resident of India; There is no upper limit on the maximum number of Partners. Benefits of LLP Registration in India The following are the benefits of LLP Registration in India: 1. Low Cost and Less Compliance: The overall cost of establishing a Limited Liability Partnership is low compared to the cost of registering a Private or Public Limited Company in India. The compliances to be followed by the LLP are also low. The LLP needs to file only 2 Statements yearly (i.e., an Annual Return and a Statement of Accounts and Solvency. 2. Liabilities are limited: Limited Liability Partnership provides a limited liability benefit to all the designated partners. In case of s business insolvency or loss, the partners’ liability is restricted to the capital contribution as per the LLP agreement. Moreover, one partner is not held responsible for the actions of negligence/misconduct of any other partner. 3. Separate Legal Existence: Just like a Company, an LLP has a separate legal entity. The Limited Liability Partnership is different from its partners. An LLP in India can sue & be sued in its own name. The Contracts are signed in the name of the Limited Liability Partnership (LLP) which helps to gain the trust of various stakeholders & gives the customers and suppliers a sense of confidence in the business. 4. Tax Benefits: It is also exempted from various taxes like DDT (Dividend Distribution Tax) & Minimum Alternative Tax. The tax rate on LLP is less than that of the Company. 5. No Minimum Capital: For the LLP formation in India, no minimum capital is required. No minimum capital contribution is required from partners. An LLP can be incorporated even with Rs. 2000 as a total capital contribution. What are the Different Types of LLP Forms in India? Following is the list of all types of LLP Forms in India: 1. FiLLiP Form: This form is used for the incorporation of LLP in India. 2. Run LLP: This form is used for reserving a name for the LLP. 3. Form 3: Details regarding LLP Agreement. 4. Form 8: Statement of Account & Solvency. 5. Form 11: Annual Return of LLP. 6. Form 24: This is the application to the ROC for striking off the name of LLP.

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