LLP

Features Of LLP

1. Limited Liability:
One of the most important features of an LLP is that it offers limited liability protection to its partners. This means that the personal assets of the partners are not at risk in case of any business liabilities or debts. The liability of each partner is limited to their capital contribution or as specified in the LLP agreement.
2. Separate Legal Entity:
An LLP is a separate legal entity from its partners. It has its own legal existence and can own assets, enter into contracts, and sue or be sued in its own name.
3. Perpetual Existence:
An LLP has perpetual existence, meaning that it continues to exist even if one or more partners leave or pass away.
4. Management:
An LLP is managed and controlled by its partners, who can decide the management structure and roles as per their convenience. The LLP agreement may specify the duties and responsibilities of each partner.
Taxation:
LLPs offer tax benefits such as pass-through taxation, which means that the profits of the LLP are taxed at the individual partner's tax rate, rather than a separate corporate tax rate.
6. Flexibility:
LLPs offer greater flexibility in terms of management and operation compared to other business structures such as companies. The partners can decide the management structure and roles as per their convenience.
7. Compliance:
LLPs are subject to various compliance requirements such as filing annual returns and maintaining proper books of accounts. However, the compliance requirements for LLPs are generally less stringent compared to companies.
8. Capital Contribution:
LLPs require a minimum capital contribution from the partners, which may be a disadvantage for some businesses with limited funds. However, the amount of capital contribution required is generally lower compared to companies.

• It has a separate legal entity just like companies.
• The liability of each partner is limited to the contribution made by the partner.
• The cost of forming an LLP is low.
• Less compliance and regulations.
• No requirement of minimum capital contribution.

Time Takings for Registration

LLP formation starting from obtaining DSC to Filing Form takes approximately 10 days, subject to departmental approval and revert from the respective department. Let our experts manage your taxes and business compliances, while you do what you do best!
WynSwell takes care of all the documents required for the purpose of LLP Registration.

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Advantages Of LLP

Separate legal entity
An LLP has a separate legal entity, just like companies. The LLP is distinct from its partners. An LLP can sue and be sued in its own name. The contracts are signed in the name of the LLP, which helps to gain the trust of various stakeholders and gives the customers and suppliers a sense of confidence in the business. Limited liability of the partners The partners of the LLP have limited liability. The liability of the partners is limited to the contributions made by them. This means that they are liable to pay only the amount of contributions made by them and are not personally liable for any loss in the business. If an LLP becomes insolvent at the time of winding up, only the LLP assets are liable for clearing its debts. The partners have no personal liabilities, and thus they are free to operate as credible businessmen. Low cost and less compliance The cost of forming an LLP is low compared to the cost of incorporating a public or private limited company. The compliances to be followed by the LLP is also low. The LLP needs to file only two statements annually, i.e. Annual Return and a Statement of Accounts and Solvency. No requirement of minimum capital contribution The LLP can be formed without any minimum capital. There is no requirement of having a minimum paid-up capital before going for incorporation. It can be formed with any amount of capital contributed by the partners.

Disadvantages Of LLP

Penalty on non-compliance
The compliance that is to be followed by LLP is minimal. But, if these compliances are not completed on time, then the LLP will have to pay a heavy penalty. Even if the LLP does not have any activity in the year, it is required to file returns with the Ministry of Corporate Affairs (MCA) annually. If it fails to file the returns, then a heavy penalty will be imposed on the LLP.
Winding up and dissolution of LLP
A minimum of two partners is required to form an LLP. If the minimum number of partners is below two for six months, then the LLP will be dissolved. It may be dissolved if the LLP is unable to pay its debts.
Difficulty to raise capital
The LLP does not have the concept of equity or shareholders like a company. Angel investors and venture capitalists cannot invest in the LLP as shareholders. This is because the shareholders must be partners in the LLP and have to take up all the responsibilities of a partner. Thus, angel investors and venture capitalists prefer to invest in a company rather than an LLP making it difficult for the LLPs to raise capital.

Registration Procedure

LLPs are governed by the Limited Liability Partnership Act, 2008, and can be formed by two or more individuals or entities.
The process of formation and registration of an LLP involves the following steps:
Obtain a Digital Signature Certificate (DSC) and a Designated Partner Identification Number (DPIN) for the partners. Register the LLP with the Registrar of Companies (ROC) by filing the necessary documents, such as the LLP agreement and the incorporation form.
The registration procedures are done by WynSwell under the supervision and control of competent person such as a Chartered Accountant.
You will get a Certificate of Incorporation from the ROC, which serves as proof of the LLP's legal existence.