Top 5 benefits of having LLP (Limited Liability Partnership)

Starting out alone on a life adventure can sometimes turn out to be risky business, and hence we need partners to get a second perspective on various aspects. Partners will always be there to lend a helping hand in times of need and celebration. In business too, we can find similar patterns.

Limited Liability Partnership (LLP) is a newly introduced corporate entity type in India aimed at entrepreneurs, small and medium sized businesses. An LLP provides many benefits of a Private Limited Company and at the same time it is easier to maintain compliance. Low registration fee and easy maintenance make LLP a first choice for many of the small businesses in India. 

#Benefit No.1: Easy to form

Compared to companies, it is very easy to set up an LLP as the process is quite simple and requires far lesser hassles. Where the minimum capital contribution in a private limited company is Rs.1,00,000 and in a public company is Rs.5,00,000, there is no such mandate in an LLP structure. Moreover, the contribution of a partner can include tangible or intangible, movable or immovable property to the LLP.

#Benefit No.2: Tax Advantages

One of the benefits of operating underneath an LLP is how you file taxes. The partnership doesn’t have to file taxes as a business, and this provides a great relief for the company. For example, Dividend Distribution Tax and tax surcharge don't apply and loans to partners are also not taxable as income.

#Benefit No.3: Greater Flexibility 

Each partner in the business has the ability to decide how much they want to contribute and how much of a partner they truly want to be in the business. They are also not obligated to participate in business meetings or consultations with anyone that they do not feel the need to. One of the best advantages of a LLP is that there is no limit to the number of owners that can be appointed in the business. 

#Benefit No.4: Much Less Liability

As the name implies, a limited liability partnership limits your liability. Since there are many owners involved in the business all the risks of the business are spread out and reduced significantly than if a single person was responsible for the business on his own. This usually is in reference to legal issues, like if the company was sued by anyone for any reason.

#Benefit No.5: No Manadate of Audit

All limited companies, private or public, are required to get their accounts audited. But there is no such mandatory requirement in case of an LLP. This is ascertained as a remarkable compliance benefit. However, a Limited Liability Partnership is required to get their books audited only in the case if :-

● The contributions of the LLP exceeds Rs. 25 Lakhs,​ ​or

● The annual turnover of the LLP exceeds Rs. 40 Lakhs

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