It it worth converting to llp in my case?

I have had a one-man-show pvt. ltd. company since few years and have accumulated significant reserves. I provide consulting services. Main reason to convert it to avoid DDT on distribution of reserves. It it worth it for me to convert to LLP simply to avoid this tax? Don't mind waiting for 3 years after conversion. Is the actual process reasonably straight forward with not much headache after conversion?

Thanks.

 

Replies (2)

Following reasons can help you decide, why you should go for an LLP:

TAX BENEFITS

The Most Important Reason for conversion of a company into an LLP is on the tax front.

  • LLP are taxed like general partnership firm, they are exempted from surcharge
  • Currently, the Income-tax Act, 1961, provides for payment of minimum alternate tax (MAT) as also for payment of dividend distribution tax (DDT) by companies. An LLP should not be liable to pay DDT.
  • No Capital Gains tax shall be charged on transfer of property from Company to LLP

No Mandatory Audit Requirement: Under LLP, only in case of business, where the annual turnover/contribution exceeds Rs 40 Lacs/Rs 25 Lacs are required to get their account audited annually by a chartered accountant. This provides great relief to small businessmen.
Flexible to Manage: LLP Act 2008 gives LLP the at most freedom to manage its own affairs. Partner can decide the way they want to run and manage the LLP, in form of LLP Agreement. The LLP Act does not regulated the LLP to large extent rather than allows partners the liberty to manage it as per their will and fancies..

Compliances: As compared to a private company, the number of compliances are on lesser side in case of LLP.

 

 

 

There is limit that the Turnover for all the past 3 years must have been less than X - is that X amount 60L or 1Cr?


 

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