Advantages of Limited Liability Partnership
Limited Liability Partnership is an improved form of traditional partnership firm that was introduced through the LLP act 2008 in order to benefit the partners. This form of business structure is most suitable for the professionals who desire to come together and offer their services without the fear of unlimited liability. In simple terms we can state that Limited Liability Partnership is a company structure that contains the features of both the partnership firm and Company. Like a partnership firm it is formed with two partner and works on agreement between the partners. Further it possess the features of company like limited liability, separate legal entity, perpetual succession etc. In this blog we will be taking a look at the benefits of Limited Liability Partnership.
Limited Liability- The liability of the partners of Limited Liability Partnership is limited to their share only unlike the partnership firm. Thus, one partner is not liable for the acts of the other partners and his personal asses can never be used for the liabilities of the firm.
Separate Legal Entity – Unlike the traditional partnership firm the legal entity of the limited Liability partnership firm formed is separate from its partners. Thus the LLP formed can own property, sue and be sued on its own name.
Compliance Requirements- The compliance requirements of Limited Liability Partnership is very less in comparison with the Private Limited Company that makes it beneficial to register a LLP rather than a private limited company.
Flexibility – Limited liability Partnership provide greater flexibility to the partners than other forms of business structure. This is because the LLP operates on the agreement that is drafted by the partners themselves which provides them the flexibility to operate and do things as they like according to the deed.
No limit on maximum number of members – Minimum 2 partners are required to start the Limited Liability Partnership but there is no limit on the maximum number of members. Unlike the private limited company where there is a limit of 200 on the maximum number of members.
Low taxation on LLP – In the Limited Liability Partnership there is no requirement to pay taxes on income and the share of their partners. Thus unlike the other forms of company it is not required to pay the dividend distribution tax on any incomes including the Bonus, commission or remuneration, Interest to partners, any payment of salary, allowed as deduction.
No requirement of compulsory audit – Almost ever company structure is required to undergo an annual audit in order to check for the accuracy of financial data. However, there is no such requirement in case of Limited Liability company. Only the companies having the certain turnover are required to undergo an audit.
Traditional partnership is not a good option for you if you desire to conduct your business on a large scale and in a more professional manner. That leaves you with the best option of going ahead with the Limited Liability Partnership that allows you to expand your business with the minimum possible hindrances and compliance burden.