Structured Biiz

LIMITED LIABILITY PARTNERSHIP

Who must opt for a Limited Liability Partnership & Why?

Limited Liability Partnership enjoys the status of being a separate legal entity having perpetual existence, unless dissolved. It can own, sell and transfer property and can also incur debts.

Liability of each partner in LLP is limited upto the amount of contribution contributed by each Partner.

Incorporation of a LLP is simple as compared to incorporation of a Company. Annual Compliances are less & low maintenance cost.

Minimum Partner is 2 and there is no such limit on Maximum number of Partners for a LLP.

Designated Partners can be changed & Partnership ratio can be transferred and the LLP can still function without any disruption.

Funds can be raised in the form of Capital Contribution by the Partners of the LLP or in the form of debt.

100% FDI is permitted in LLP under the automatic route. LLP having 100% FDI is also permitted to invest in another Company or LLP in which 100% FDI is allowed under the automatic route.

Pros & Cons

Pros

1. Audit Not Compulsory

A LLP is required to get audit done only if contributions of the LLP exceeds Rs. 25 Lakhs, or the annual turnover of the LLP exceeds Rs. 40 Lakhs, whichever is earlier.

2. Capital requirement:

LLP can be formed with a Minimum Capital Contribution of Rs. 5,000/-.

3. No tax on Distribution of profit:

Unlike Private and Public Company, there is no requirement for payment of DDT on distribution of income/ profits among partners.

4. Preferred by

Preferred by small businesses, who wish to have structured form and low maintenance cost.

Cons

1. Penalty

If annual compliance forms are not filed within the due date, there is Rs. 100/- per day penalty fee for not filing annual compliances. Even a delay in filing for a continuous period of one year may cost a LLP approx. Rs. 73,000/- as Penalty over and above regular professional fees. So, please think carefully if you wish to start a LLP.

2. Not preferred by

Not preferred by Venture Capitalists for raising funds.

Requirements

Compulsory Annual Compliances

MCA Filing

For Non-compliance, there is Rs. 100/- per day penalty.

IT Filing

Irrespective of the turnover, IT filing is must.

GST Filing

In case, GST registration is obtained.

Auditing

Once the annual turnover of the LLP exceeds Rs. 40 Lakh

Below compliances as per requirement:

LLP Formation Package

Rs. 9,999/-*

Timeline: 15-30 Days
(*Inclusive of GST. Govt. Fees, Stamp paper and Reimbursements, if any shall be payable over and above the incorporation fees mentioned herein above. Penalty Fee levied by Govt on any filing due to delay from Client's end needs to be borne by the Client.

Request you to provide 2 Unique Names of the LLP. In case the name approval is not granted in the first instance, Govt Fee of Rs. 200/- and Our Fee of Rs. 999 shall be charged separately for re-application of name.)

Post Formation Compliance Package

Rs. 6,999/-*

inclusive of GST

(*Excluding Govt. Fees & reimbursements, if any. However, any penalty levied due to delayed filing to be borne by the LLP.)