Limited Liability Partnership
3 Points You Must Know About Limited Liability Partnership
1. Limited Liability:
The liability of the partners in a Limited Liability Partnership is limited. Further, this liability is limited to the extent of contributions made by them. Therefore, the partners are not liable for any loss in the business. Moreover, they have no personal liabilities for business loss.
2. Compliances and Regulations:
The LLP does not have to do a lot of compliance. But, if you default then the penalty is quite heavy. Moreover, even if there is no business activity during the year, we still need to file annual returns with the MCA.
3. Evaluation of Alternative Business Constitution:
It is quite easy to form LLP. But, before forming LLP we must see the suitability of other forms such as private limited company, partnership, proprietorship, etc. Further, the suitability decision depends upon the capital requirement, ownership control, nature of the business, succession of business, etc.
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FAQ`s About LLP
1. What is a limited liability partnership?
The Limited Liability Partnership Act 2008 brought into existence a new business form. Further, this new business form is LLP. Moreover, it has features of a mixture of partnership firms and private limited companies.
2. What is LLP’s full form?
The full form of LLP is a Limited Liability Partnership.
3. Can LLP take a loan from outsiders?
LLP may take a loan from outsiders. However, this loan is subject to the terms & conditions of the LLP agreement.
4. How to close LLP?
To close the LLP we need to perform the following steps.
Firstly, stop/cease all commercial activity.
Secondly, close all bank accounts.
Thirdly, prepare required affidavits and declarations.
Further, prepare the required documents.
After that, obtain a certificate from a professional.
Finally, file form 24.
5. How many designated partners are in LLP?
There is a minimum of two designated partners in the LLP. Further, one among the two shall be a resident of India.
6. What is form 3 in LLP?
Form 3 in llp relates to the LLP agreement and any changes made therein. Further, we need to file Form 3 within 30 days of incorporation of LLP.
7. What are the features of a limited liability partnership?
The main features of a limited liability partnership are as follows:
(a)A body corporate and has a separate legal entity:
LLP is a body corporate and is a legal entity separate from its partners.
(b) Perpetual Succession:
Moreover, LLP will exist even after the retirement, insolvency, insanity, or even death of one or more partners.
(c) Artificial legal person:
LLP is an artificial legal person.
8. What is the rate of income tax on income earned by LLP?
The rate of income tax on income earned by LLP is 30%.
9. What is LLP Act?
The government enacted this limited liability partnership act in 2008. Further, by virtue of this act, LLP was introduced as a new constitutional type of business. Moreover, LLP is a hybrid form of partnership and a private limited company.
10. What is the difference between LLP and partnership?
The Partnership Act, of 1932, governs a partnership. But, the Limited Liability Partnership Act, of 2008, governs LLP. Moreover, in the case of a partnership, the liability of the partners is unlimited. However, in the case of LLP, the liability of the partner is limited to their contribution.
11. How much are the LLP registration fees?
The LLP registration fee depends on the amount of capital contribution. Moreover, it also depends upon the state where it is formed.
12. How to do LLP registration?
The steps for LLP registration are as follows:
Firstly, get a digital signature certificate or DSC
Secondly, apply for the DIN number
Thirdly, get the approval of the LLP name
After that, incorporate LLP on the MCA portal
Lastly, file the LLP agreement.
