ADVANTAGES OF FORMATION OF LIMITED LIABILITY PARTNERSHIP (LLP

)
Limited Liability Partnership entities, the world wide recognized form of business organization has now been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. LLPs also have many advantages over proprietorships, partnerships and limited companies as elaborated below.

LIMITED LIABILITY
First and foremost benefit of trading/doing business via LLP is the limited liability conferred upon the partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP. Unfortunate events like business failures are not always under an entrepreneur's control; hence it is pivotal to secure the personal assets of the businessman in the event of crises. Unlike proprietorship and partnership, if an LLP becomes insolvent and is wound up, only the assets of the LLP are used to clear its debts. The partners of LLP have no personal liabilities and are not made bankrupt and are free to operate as credible businessmen.

LEGAL ENTITY/STATUS OR RECOGNITION
An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status does. Operating as a corporate entity/LLP often gives suppliers and customers a sense of confidence in a business. Larger organisations in particular will prefer in dealing with corporate entities than proprietorship/partnership organisations. Easy to attract quality workforce and achieve strategic motivation of employees by using flexible and wide range of management designations.

TAXATION
LLPs are taxed like general partnership firms. LLPs pay an effective tax of 30.9%. They are exempted from 10% surcharge. LLPs tax payment is lower than that of companies, which pay a 33.99% tax on profits. The tax will be imposed only on 40% of the LLP's income, since the firm will be allowed to pay the balance 60% to the partners as remuneration. This means, the partners will have to pay tax on the amount paid to them. So, there will be no double taxation of income.

NO AUDIT REQUIREMENT
Tax Audit is not required unless capital exceeding Rs. 25 lac or turnover exceeding Rs. 60 lac. Unlike Limited Companies, no requirement for payment of Corporation Tax on distribution of income among Partners. Unlike Private Limited Companies, LLPs are exempted from statutory audit.

OTHER IMPORTANT ADVANTAGES
Low cost of Formation and compliances Less statutory compliances as compared to Private limited Companies
 

 

    

No requirement of any minimum capital contribution No restrictions as to maximum number of partners Body corporate can be a partner of an LLP Less Government Intervention Easy to dissolve or wind-up

Less requirements as to maintenance of statutory records Renowned and accepted form of business worldwide

Empowering En trepreneurship...

PUNE  BANGALORE  MUMBAI  CHENNAI  KOLKATA  NAGPUR  DELHI  HYDERABAD
Tel : +91 20 6729 6500 / 6400 5120 Mob : +91 97309 85507 / +91 98800 17047 Email : enquiry@bmcgroup.in Website : www.bmcgroup.in
An ISO 9001 : 2008 Company

Copyright © 2011- All rights reserved BMC Consultancy Services Pvt. Ltd.

Registration of Limited Liability Partnership (LLP)
Minimum Requirements
  

DPIN & Digital Signature Application Requirements
(Please provide below mentioned documents for all the Partners)

Minimum 2 Partners Minimum 2 Designated Partners Atleast 1 of the designated partners shall be an Indian Resident If a body corporate is a partner, it has to nominate a natural person as its nominee The Partners and Designated Partners can be same person There is no concept of share capital, but there has to be some sort of contribution from each partner DPIN (Designated Partner Identification Number) for all the Designated Partners DSC (Digital Signature Certificate) for all the Designated Partners

Document Particulars
Passport size photograph i) Proof of Identity:  PAN Card copy (mandatory for Indian residents)  Passport copy (mandatory for Foreign Nationals/NRIs/PIO card holders)

Important Points to be considered
3 Copies 1. The identity proof must have father's name (not required for foreign nationals) and date of birth 2. The address proof should be in the name of the applicant and shall have Pincode/Zip code in it. 3. Please ensure that the address proofs are not older than 40 days (In case of Telephone bill, Bank statement & Light bill) 4. The same proof document can not be used for address and Id proof simultaneously

 

ii) Proof of residence: (Any one of the below)  Passport copy  Driving License copy  Election (Voter Identity) Card copy  Electricity bill  Telephone bill  Bank Account Statement

Procedure/Steps involved in Registration
STEP NO. STEPS
Preliminary discussion
1

TIME FRAME
(Working days)

Between BMC Team & the Promoters of the Company:
  

Ascertaining document requirement and availability Preparation of signing documents by BMC Signing of the Incorporation documents by Promoters

4 (Varies by the response time taken by the Promoters)

2

DSC (Digital Signature Certificate) Getting DSC for any one of the Director for digital authentication of the Incorporation documents DPIN ( Designated Partner Identification Number) Approved DPIN is a pre-requisite for incorporation process Pre- Name Application Search

1

3

2

4

 

The Promoters have to provide atleast 6 (Six) names in the order of priority. To make an online search of availability of names as desired by the Promoters

--

5

Application for Name Availability

Filing of Form 1 with the ROC

4

Final Process:
6
  

After ROC's approval for name of the LLP, filing all the Incorporation documents with the ROC Online uploading of e-Forms Payment of Registration fees

4

Post-Incorporation Process:
7
   

Drafting LLP Agreement Duly stamped LLP Agreement Filing of Form 3 Filing of Form 4

3

Empowering En trepreneurship...

PUNE  BANGALORE  MUMBAI  CHENNAI  KOLKATA  NAGPUR  DELHI  HYDERABAD
Tel : +91 20 6729 6500 / 6400 5120 Mob : +91 97309 85507 / +91 98800 17047 Email : enquiry@bmcgroup.in Website : www.bmcgroup.in
An ISO 9001 : 2008 Company

Copyright © 2011- All rights reserved BMC Consultancy Services Pvt. Ltd.

Sign up to vote on this title
UsefulNot useful