A limited Liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. Limited Liability Partnership was introduced in India in 2008. The rationale of this business model is to provide simplified business entity that is simple to regulate while providing limited liability to its owners.
With easy incorporation process and simplified compliance formalities, LLP is now preferred in line with the Micro and Small (MSME) business structures that are family owned or closely –held business structures. Since, LLP are not capable of issuing equity shares, LLP should be used for any business that has plans for raising funds during its lifecycle other than the mode of equity shares.
The main advantage of LLP over a traditional form of partnership firm is that, one partner is not liable for another partner`s misconduct or negligence. An LLP also Provide limited liability towards the debts of the LLP. Therefore, all partnerships in LLP format are privileged with limited liability within the Partnership similar to that of shareholders of a private limited company. However, unlike shareholders of private limited company, the designated partners of the LLP have the right to manage the business directly.
There are some benefits for Limited liability Partnership Registration (LLP)
1) Smooth organizations in the internal structure of LLP.
2) There are no maximum limits for the number of partners in LLP.
3) Professionals like Chartered accountants, Cost Accountants (CMA), Advocates, engineers, doctors and architects may prefer to register their business as LLP.
4) Audit compulsory is not required upto some threshold limits.
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