Limited Liability Partnership
The Limited Liability Partnership (LLP) in India emerged after January 2009, seamlessly blending the advantages of a partnership and a limited liability company. Its swift popularity among startups and professional services was undeniable. The fundamental concept behind LLP registration was to offer a business structure that is effortlessly manageable and grants owners the advantage of limited liability.
Advantages of LLP Incorporation
LLP registration offers several compelling reasons that prompt individuals to choose it as their preferred business model. Here are four key benefits:
Limited Liability: When opting for LLP registration, the members bear only a limited portion of the firm’s debts. In the unfortunate event of bankruptcy, the partners’ personal assets remain safeguarded, unlike in proprietorships and partnerships, where the personal assets of directors and partners are vulnerable to seizure if the business faces insolvency.
Separate Legal Entity: An LLP exists as a distinct legal entity, independent of its partners. It enjoys perpetual succession, meaning that even if partners leave, the business continues to operate. The dissolution terms need to be mutually agreed upon to dissolve the firm.
Flexible Agreement: Transferring ownership in an LLP is a straightforward process. New designated partners can easily be inducted, and ownership can be smoothly transferred to them.
Suitable for Small Businesses: LLPs with a capital amount less than ₹25 lakhs and an annual turnover below ₹40 lakhs are exempt from formal audits. This exemption makes LLP registration especially advantageous for small businesses and startups.
