Limited Liability Partnership In The Era Of Start-Up | Ebizfiling


 

Introduction 

 

In the era of start-up, Limited Liability Partnerships (LLP) is a breath of fresh air for entrepreneurs. The LLP is regarded as an "alternative corporate vehicle" that aims to fulfil the key benefits of both partnership and the company. This is done by giving LLP members the freedom to organize their internal management structure as a partnership based on the mutual agreement while restricting the partners' liability to the shares they own.

 

 What is a Limited Liability Partnership? 

 

A business where only 2 members (which can be extended up to 5 Designated Partners (without DIN)) are required and no maximum limit is specified with the characteristic of limited liability to the partners is referred to as a Limited Liability Partnership.

 

 Minimum requirement for start-up to form an LLP 

 

There are 3 basic requirements the start-up has to fulfill to become an LLP. They are as follows-

 

  • A start-up must have 2 people to act as partners to form an LLP.

  • From the 2 designated partners, one should be an Indian citizen residing in India.

  • The office of the LLP must be located in India.

 

 The registration process of an LLP 

 

The LLP registration process is the simplest and most transparent because it is a combination of a partnership firm and a company, such as the flexibility of a partnership firm and the limited liability characteristic of a private company. The start-up should follow the following steps-

 

  • Get a digital signature (DSC). An authentic way to submit your document electronically.

  • Apply for the Director Identification Number (DIN) for each partner with the details like name, address, age etc.

  • Get the name of the company approved through the ‘Reserve your Unique Name’ service (RUN)

  • For incorporation of LLP, fill the Form FiLLiP which includes DIN application and PAN and TAN Application.

  • File ‘Limited Liability Partnership Agreement’.

 

 Benefits of setting up your start-up as LLP 

 

  • The fundamental benefit of an LLP is that it is easy to start and run, and there are only a few formalities involved in the process.

  • The registration fee is less compared to the companies

  • Its registration fee is lower than that of a company.

  • LLPs can be established with any minimum capital requirement.

  • The liability of the partners is limited to the amount of their agreed contribution to the LLP.

  • No obligation for a mandatory audit.

  • The annual ROC compliance of an LLP is less as compared to that a Private Limited Company.

  • The LLP is a suitable vehicle for small enterprises and for investment by venture capital because of flexibility in the structure and operation.

 

 Final thought 

 

In the era of start-up, LLP registration is need of an hour. It will enhance our company sector to new heights in the international market. An LLP is easy to register and the partners have to file less compliance as compared to other companies.   

 

 

 

 

 

 

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