As per the Indian Law, there can be two forms of organizations – a Limited Liability Organization (Company) or a Limited Liability Partnership (LLP). These help determine the operations and functioning of the organization based on the authority given to the partners/ owners.
Advantages of a Limited Liability Partnership
With each form of organization, there are certain advantages and disadvantages. Limited Liability Partnership gives the following benefits to the newly set up organizations –
- No limit on the number of partners that a company can have – In an LLP, there can be as many partners as required who share the same liability. This helps increase the total liability that the company can have without stressing any one partner.
- Tax benefits – An LLP organization, as a partnership, is exempt from paying taxes as a business. However, the partners have to file their taxes individually as per the taxation norms applicable to them.
- Flexibility of ownership – IN addition to the shared liability, an LLP allows partners to decide their contribution to the business both in terms of monetary decisions and otherwise.
Disadvantages of a Limited Liability Partnership
- A limited liability partnership cannot be formed with less than 2 partners. Further, in case of a foreign or an NRI partners, at least one partner should be an Indian resident.
- Dissolution of Assets in an LLP is not convenient and straightforward unless specified in the LLP agreement. The partners need to provision for the option of returning of assets once contributed to the business.
Registration of a Limited Liability Partnership in India
The LLP in India is governed by the Limited Liability Partnership Act of 2008. According to the Act, the partners need to register the organization with the Registrar of Companies. These days, several websites guide companies through LLP registration facilities by form filling, obtaining DSC and DPIN. Post this; these websites also assist with verification’s and approvals. Companies can submit their forms and documents on the website and are finally registered on the Registrar of Companies. The entire process takes about 10-15 working days. In addition, partners can also apply for the PAN, TAN and Bank accounts over these websites.