Limited Liability Partnership (LLP) is a balanced structure, carrying benefits conventional partnership and still limiting personal liabilities of the partners. It is regulated as a contractual agreement between the partners under the Limited Liability Partnership Act, 2008. It has quickly become a popular choice for services and professional firms like Chartered Accountants, recruiting firms, consulting businesses, etc.
LLP as Compared to Private Limited
LLPs are similar to Private Limited Companies with respect to compliance and operational requirements. Recognized as a separate legal entity than the partners, it can contract or involve in any legal proceedings in its own name. That enables the partners of an LLP to separate business liabilities or debts being recovered from their personal assets. Compliance requirement here is greater than regular partnership firms. However, Compared to a private limited company structure, it is easier to incorporate and maintain.
As a drawback, ownership transfer of a Limited Liability Partnership is not as easy as of a company. Neither an LLP can issue ESOP. For the reason, LLP is not the most ideal choice for startups who want to hyper-grow, seek seed investor or venture capital funding, or issue share capital to its employees.
Registration of LLP is Simple
The process of LLP Registration in India is revamped by the Ministry of Corporate Affairs. A quicker process of LLP incorporation is made available on 2nd October 2018 as part of the ease of doing business initiative by the Government
Process of Registration
The LLP Registration process in India is quite easy. As a result, several business individuals find it easier to establish their businesses as an LLP. The process is as follows:
Get the DSC (Digital Signature Certificate) of the members of the LLP
Apply for, and obtain the Director Identification Number.
Get Approval for the name of the LLP.
Get the LLP incorporated under the LLP act of 2008 by filing the application along with the documents required.
File the Limited Liability Partnership Agreement
The LLP Agreement entails the details of powers wielded by the partners of the LLP.