LLP has become one of the most preferred choices of organization which brings together various advantages of both partnership firm and company at a lower compliance cost. It offers a wide range of benefits over traditional type of businesses as it is convenient to manage and provides a limited liability to its owners at the same time.
Introduction of LLP was made in 2008 by way of Limited Liability Partnership Act, 2008. It is important to note that the mutual rights and duties of the partners of an LLP shall be governed by the LLP agreement between the partners, or between the LLP and its partners.It is mandatory for every LLP to have two partners and one of them should be resident of India.
LLP is a body corporate and a separate legal entity.The partners aren’t responsible for the negligence and misconduct on the part of other partners.
LLP exist as a separate legal entity therefore no partner is liable for the repayment of debts incurred by the LLP. It simply means that the personal property of the partners would never be attached to the business regardless of the losses.
It is easy to join or leave LLP. Therefore, the ownership can be transferred easily by changing the partners of the LLP.
In LLP, audit of accounts is not required to be done if the turnover does not exceed Rs. 40 lakhs or capital contribution does not exceed Rs. 25 lakhs. This is a great relief to the small businesses as well as start-ups providing minimal compliance requirement.
In comparison to private limited companies, LLP is taxed at lower rates. The Loan given to partners or directors is not taxed as Income in contrast to private companies where they are treated as deemed dividend in the hands of director
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