Limited Liability Partnership

3 Points You Must Know About Limited Liability Partnership

1. Limited Liability: 

The partners in an LLP have their liabilities limited to the extent of contributions made by them. The partners are not liable for any loss in the business and therefore have no personal liabilities.

2. Compliances and Regulations:

If the reason for the difference in the ITC reconciliation is due to negligence on the part of your supplier, then you should communicate with your supplier and keep a record of this.

3. Evaluation of Alternative Business Constitution:

Before deciding to start LLP, you must carefully evaluate the pro and cons of LLP. The are other business constitution forms also such as private limited company, partnership etc. This aspect is to be evaluated from the angle of the nature of the business too. After an informed consideration of all the aspects, you should take this decision.

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FAQ`s Regarding LLP

The concept of LLP came into existence by the enactment of the Limited Liability Partnership Act 2008. This new form of the business constitution has the characteristics of both a partnership firm and a company.

The full form of LLP is a Limited Liability Partnership.

Subject to the terms & conditions of the LLP agreement, LLP may take a loan from outsiders.

04. How to close LLP?

LLP is closed in the following steps:

Step 1: Stop/cease all commercial activity.
Step 2: Close all bank accounts.
Step 3: Prepare required affidavits and declarations.
Step 4: Prepare required documents.
Step 5: Obtain a certificate from a professional.
Step 6: File form 24.

There is a minimum of two designated partners in LLP. One among the two shall be a resident of India.

Form 3 is filed within 30 days of incorporation of LLP. This form is filed for information relating to the LLP agreement and any changes made therein.

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:

This means LLP will exist even after the retirement, insolvency, insanity or even death of one or more partners.

(c) Artificial legal person:

LLP is formed by a legal process and is an artificial legal person.

The rate of income tax on income earned by LLP is 30%.

The government enacted this limited liability partnership act in 2008. By virtue, this act, LLP was introduced as a new constitutional type of business. LLP is a hybrid form of partnership and private limited company. It has perpetual succession and has a legal identity separate from its partners.

The Partnership Act, 1932, governs a partnership. Limited Liability Partnership Act, 2008, governs LLP. The liability of partners in partnership is unlimited, whereas the liabilities of partners in LLP are limited to their contribution.

The llp registration fee depends on the amount of capital contribution and the state where it is formed.

The steps for llp registration are as follows:

Step 1: Get a digital signature certificate or DSC

Step 2: Apply for DIN number

Step 3: Get approval of LLP name

Step 4: Incorporate LLP on MCA portal

Step 5: File LLP agreement.