What is Limited Liability Partnership?
Limited Liability Partnership Registration, governed by the Limited Liability Partnership Act 2008, is a company where its partners hold limited liability and do not need a lot of maintenance. If such a company defaults, the banks/creditors can only liquidate the company’s assets, not the directors’ assets.
The partners/owners of a limited liability partnership firm would not be held accountable or responsible for the other partner’s misconduct. The goal behind proposing such a partnership is to provide a simple kind of business organization that is not challenging to maintain but also provides the benefits of having limited liabilities.
Let’s have a look at some of the major advantages of a Limited Liability Partnership.
Advantages of a Limited Liability Partnership
Listed here are the benefits of a Limited Liability Partnership:
1. Uninterrupted Existence:
A Limited Liability Partnership firm enjoys continuing existence or perpetual succession unless the partners mutually choose to dissolve it.
2. Separate Legal Entity:
A Limited Liability Partnership (LLP) is a legal entity and a juristic person created under the Limited Liability Partnership Act of 2008. The partners of a Limited Liability Partnership are separate from the entity. In such a firm, the partners can sue one other and can also be sued for any wrongdoing.
3. Easy Transferability:
The ownership of a Limited Liability Partnership can be simply transferred from one individual to another. If ownership must be transferred, the partner must induct them as a Limited Liability Partnership designated partner.
4. Audit Not Required:
Owners or entrepreneurs with a turnover of less than 40 lakhs and a capital contribution of less than 25 lakhs will require an audit of their books. Limited Liability Partnerships are ideal for startups and small firms that do not want to begin operations adhering to strict regulatory compliance.
5. Limited Liability :
One of the major advantages of a Limited Liability Partnership is that you are only legally responsible for a certain amount of debt. Unlike proprietorships and partnerships, the LLP’s debt responsibility is limited in the event of insolvency or bankruptcy.
6. Owning Property:
A Limited Liability Partnership (LLP) can own property since it is a separate legal entity. As long as the LLP is in operation, the partners have no claim on the property.
7. Easy Closure:
A Limited Liability Partnership is simple to form and dissolve. Unlike a Private Limited Company, which can take almost a year to close, a Limited Liability Partnership (LLP) can close its doors in two to four months.
A Limited Liability Partnership (LLP) can form a partnership with any individual or organization, including foreigners and non-resident Indians. A person must be 18 years old or older and have a valid PAN card to become a partner. The government has enacted several laws and regulations that benefit businesses, allowing them to grow and contribute to the economy.