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imited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It is well defined as a structure which is easy to incorporate with minimal compliance formalities. If you are a micro or small business owner which is family owned or held closely and/or a business professional, this form of business is designed for you. It is one of the easiest form of businesses to incorporate and manage in India. The main advantage of a Limited Liability Partnership over a traditional partnership firm is that in a LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. A LLP also provides limited liability protection for the owners from the debts of the LLP.
It is a separate legal entity governed by the LLP Act of 2008 which allows you to enter into contract with other entities, sue or be sued, own assets and borrow funds in the name of LLP firm. This distinguishes it from a regular partnership firm.
LLP agreement would define the operating structure which includes roles and responsibilities of partners. Usually, LLPs select a ‘Designated Partner’ who controls the day-to-day affairs of the firm. It also helps in protecting partner’s interest in case of loss due to unlawful act of any other partner
If you want to safeguard your personal assets in case of loss or insolvency, this is your cup of tea. One partner is not held responsible for the actions of negligence or misconduct of any other partner. Liability of financial contribution of any partner is restricted to the capital contribution as per the LLP agreement.
LLP requires lesser compliances over a Private Limited Company. There are many compliances that do not apply to this structure such as board meetings, audit requirements, statutory meetings, etc. In addition, the services offered by professionals are economical for LLPs as compared to a private company. This may be ideal for start-ups who do not have any equity funding requirements.
Since LLP is a separate legal entity separate from its Managing Partners, the ownership of the LLP can be changed by changing the Managing Partners, the ownership of the LLP can be changed.
There are multiple tax advantages to LLP:
- Partners can give a loan to LLP and vice-versa. There is no restriction in receiving or providing loans.
- There is no dividend tax in case of LLP but in the private limited company, if you want to pull your profit from business it is taxable.
This is what we do when YOU SIT BACK & RELAX
- Review the documents and information provided
- Apply for Digital Signature Certificate (DSC)
- Check availability of company name with MCA
- Draft Memorandum of Association (MOA)
- Draft Articles of Association (AOA)
- Draft all other incorporation documents
- Reserve name with MCA
- Apply for Directors Identification Number (DIN)
- Apply for company incorporation with MCA
- Apply for PAN and TAN of company
Latest Passport size photograph of Partners
- Aadhar card and Voter ID/ Passport/ Driving License of Partners
- PAN Card of Partners
- Foreign nationals must provide a valid passport
Latest Telephone Bill /Electricity Bill/ Bank Account Statement of Partners
The above documents should not be more than 2 months old
- Latest Electricity Bill/ Telephone Bill of the registered office address
- No Objection Certificate to be obtained from the owner(s) of registered office
- Rent Agreement of the registered office should be provided if any
All other incorporation documents to be provided in soft copy
Maintaining books of accounts as per Indian GAAP
Books of accounts have to be maintained under different statutes – Income Tax Act, Companies Act 2013 and GST Act. All the respective acts specify the nature of books to be maintained, retention period and other statutory requirements
LLP Agreement must be filed with the Ministry of Corporate Affairs within 30 days of incorporation
Auditor has to be appointed within 30 days of LLP Incorporation
Annual Return has to be filed in LLP Form 11
LLP must have its registered office within 30 days from the date of incorporation and all the times thereafter
Letterheads should have few mandatory fields as name, address, Phone No, Fax, etc
Bank account of the LLP has to be opened on incorporation
Applying TAN of LLP on incorporation
Applying PAN of LLP on incorporation
A TDS Return is submitted on a quarterly basis to Income Tax Department. It is a summary of all the transactions related to TDS made during a quarter
Income tax return
LLP is required to file their income tax return using Form ITR 5
Entities required to register for GST as per regulations must file for GST application within 30 days from the date on which the entity became liable for registration under GST
GST returns have to filed on monthly, quarterly and annual basis
Every LLP whose turnover exceeds INR 1 Cr. in case of a business or INR 50 Lakh in case of a profession, is required to get its books of accounts tax audited under section 44AB of the Income-tax Act
The accounts of every LLP shall be audited in accordance with Rule 24 of LLP, Rules 2009. Such rules, inter-alia, provides that any LLP, whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty five lakh rupees, is not required to get its accounts audited. However, if the partners of such limited liability partnership decide to get the accounts of such LLP audited, the accounts shall be audited only in accordance with such rule
Transfer pricing rules and certificaion would be required
Any individual/company/LLP which has undertaken an international transaction with an associated enterprise is required to maintain documentation as per the rules. Also, any individual/company/LLP which has entered into an international transaction during a previous year is required to obtain an Accountant’s Report and furnish report before 30th November of the financial year
If a LLP fails to comply with the rules and regulations of the Companies Act, then the LLP and every officer who is in default shall be punishable with fine for the period for which default continues. In case of delays, additional fees is required to be paid and it inceases with time.
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