Limited Liability Partnerships are normally called with their abbreviated form as LLP’s. It is a fusion structure between a partnership firm & a private limited company. In LLP’s business is carried out in a corporate framework as per the mutually accepted partnership deed. LLP’s are preferred when the partners are members of an institute or individual earnings are clearly defined, and distributed by dividend. Within an LLP the earnings of the members is normally seen as personal income.
The liability of partners is limited in case of an LLP whereas, partners are personally liable for debts of the business in a general partnership firm and even their personal property may be used to settle the firm’s debts. Under LLP structure, partners are not responsible for negligence or misconduct of other partners, so there is protection against wrong doings of other partners in LLPs.
Here are numerous benefits:
In some cases, it may disadvantageous.
How the Income Tax Act applied to LLPs?
Both general partnerships and LLPs are taxed at flat rate of 30% like partnership firms. All the other income tax act provisions are applied likewise except that general partnership firms are covered under presumptive taxation scheme.
What is the minimum capital requirement for LLPs?
There is no minimum capital requirement; LLPs can be registered even with Rs. 100 as total capital contribution.
Is there audit requirement for LLP?
If the turnover is Rs. 40 lakh or more or when the total capital contribution is Rs. 25 lakh or more, accounts of an LLP are needed to be audited.
We support an individual or an entity in shaping out a Company or LLP as per the formation guidelines given under the act and making obligatory applications at suitable forum.