Having gone through the limitations of Both Corporate Form & Partnership Set ups, Limited Liability partnerships are emerging as a Independent Risk free & Profit oriented business form. Limited Liability Partnership is essentially a business model which consolidates the advantages of Both Corporate & Partnership Formats. Similarly it avoids the disadvantages of the Corporate Form & Partnership Form. Following are the advantages of Limited Liability Partnerships
1. Easy to form
Any two persons known as designated partners can start Limited Liability Partneship.
2. Minimum Capital
Limited Liability Partnership can be started with minimum capital. The act does not specify the minimum amount which is necessary to start a LLP. Hence the capital which is also known as Designated Partners Contribution should be any figure which is greater than zero.
3. Facility to increase Contribution
The contribution by the partners can be subsequently changed once the LLP is formed.
4. The Partner’s Liability remains Limited
The contribution of a Designated Partner is a decisive factor of Liability of designated partner. The Liability of Partner is limited to the extent of contributions brought in the LLP.
5. Less Procedural Compliances
There are less procedural compliances as compared to that of corporate form of business to any LLP.
6. Easy to Incorporate
It is a business form which is easy to incorporate. LLP division can incorporate an LLP within a period of a month if all the documents are correct.
7. Less Statutory Fees
The Statutory fees charged are very reasonable and hence affordable.
8. Less Stamp duty
Less stamp duty is payable in case of LLP as compared to that of Company.
9. Audit Provisions applicable after certain limit
Statutory audit is applicable only when the contribution of LLP exceeds Rs. Twenty Five Lakhs or the turnover of LLP exceeds Rs. Five Crores or both. Hence no statutory audit is applicable if the total contribution does not exceed Rs. Twenty Five Lakhs or turnover in a financial year does not exceed Rs. Five Crores.
10. Can be formed by Professionals
The LLP can be formed by the professionals like Company Secretaries, Cost Accountants and Chartered Accountants among themselves. These are also known as Multi Disciplinary Partnerships (MDP) .
There were various forms like Form 1, 2, 3, 4 which were available for Incorporation of a LLP on LLP portal. The form 11 & 8 were also used for annual compliances. However the LLP system is in integration with MCA website since June 2012. Hence the professionals are expecting some significant changes in the forms & their contents also. It is also predicted by some professionals that the total number of forms which are available for filing may be reduced. However nothing can be correctly defined & predicted till the Official Integration Process gets completed and the new forms become available for filing to the stakeholders. However the further information can be tentatively traced out y calling LLP helpdesk on 011-66336666.
Considering the changes which may take place in the LLP Forms & Procedures in a couple of days, it would be better to wait & watch & to pray for Less Compliances which will delight the clients & professionals also!