LLP Incorporation
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LIMITED LIABILTY PARTNERSHIP
A Limited Liability Partnership (LLP) is a hybrid business structure that combines the features of partnerships and corporations. It provides its partners with limited liability protection, shielding their personal assets from the debts and obligations of the business. Governed by specific LLP regulations, this structure offers a unique blend of flexibility and protection.
Features of LLP:
- Limited Liability Protection: LLPs offer partners limited liability, shielding them from personal responsibility for the business's debts and liabilities, as they are separate legal entity.
- Flexibility in Management: Partners in LLPs enjoy freedom in structuring the management and operations, with fewer formalities compared to traditional corporations.
- Tax Efficiency: LLPs enjoy tax advantages, such as Dividend Distribution Tax, aren't subject to Minimum Alternate Tax (MAT), and profits shared among partners aren't taxed again helping reduce the overall tax burden.
- Ease of Compliance: LLPs has less compliance requirement as compared to Private Limited Companies like no requirement to conduct Annual General Meeting, Audits, etc.
- Perpetual Succession: The existence of LLP is not affected by events such as admission, death, retirement or insolvency of its partners. It has same benefit as provides to other corporate entities.
FAQ
What is an LLP?
An LLP (Limited Liability Partnership) is a legal business entity that offers limited liability protection to its owners, combining features of partnerships and corporations.
Any two or more individuals or entities, including corporations and partnerships, can form an LLP in India.
Who can form an LLP?
What are the minimum requirements for LLP incorporation?
You need a minimum of two partners, with at least two designated partners, one of whom must be a resident of India. A registered office address in India is also required.
- Obtain Digital Signature Certificates (DSC) for partners.
- Obtain Director Identification Number (DIN) for designated partners, if applicable.
- Apply for name Reservation
- Form-2 (Filip) with the Registrar of Companies (RoC).
- Pay prescribed fees and submit required documents.
How is an LLP incorporated?
What documents are required for LLP incorporation?
- Proof of registered office address.
- Identity proof (PAN card, Aadhaar card, passport, etc.) and address proof (utility bill, bank statement, etc.) of partners.
- Partnership deed
No, LLPs do not have any minimum capital requirement.
Is there a minimum capital requirement for LLP incorporation?
What are the advantages of an LLP?
Advantages include limited liability protection, separate legal entity status, tax benefits, ease of formation and dissolution, minimal compliance requirements, and flexibility in management.
Typically, it takes around 15 to 20 working days, depending on document availability and processing time with the Ministry of Corporate Affairs.
How long does LLP incorporation take?
What are the post-incorporation requirements for an LLP?
Execute LLP Agreement within 30 days of incorporation.
File Form-3 (LLP Agreement) with the ROC.
Annual compliance includes filing of annual returns and financial statements with the ROC within 60 days from the end of the financial year, proper accounting records maintenance, and tax compliance.
What are the annual compliance requirements for an LLP?
Can an LLP be converted into a company or vice versa?
Yes, an LLP can be converted into a private or public limited company, and vice versa, subject to regulatory approvals.
Yes, foreign nationals or entities can be partners, but at least one designated partner must be a resident of India.
Can foreign nationals or entities be partners in an LLP?
What taxes apply to an LLP?
An LLP is taxed at a flat rate of 30% (plus surcharge and cess) on its profits, and partners are taxed individually on their share of profits according to their income tax rates.
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