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Limited Liability Partnership (LLP). Here we are providing full details for LLP (Limited Liability Partnership), In This article you can find Meaning or Definition of Limited Liability Partnership, Characteristics of Limited Liability Partnership, Tax Implications, Complete Details for LLP in India etc. Recently we have provided complete details on Removal Of Statutory Auditor – Detailed Analysis With Examples & Transfer Pricing Methods and Income Tax Implications On Conversion Of Firm Into Pvt Ltd Company now u can scroll down below n check complete details regarding Limited Liability Partnership – Complete Details
Meaning of Limited Liability Partnership:
An entity can have its legal form in many types. LLP is one among them.
A limited liability partnership is a form of business organization that combines elements of partnerships and companies.
In an LLP, all partners have limited liability, This is simply similar to that of the shareholder’s liability of a company. Here the liability of partners is limited to the extent contributed by them.
LLP is different from Limited partnership.It operates like a limited partnership, but in llp each member of the is protected from personal liability, except to the extent of their capital contribution in the LLP.
Professional organizations like accounting and law firms often form as limited liability partnerships because an LLP. Partners in a limited liability partnership aren’t responsible for another partner’s debts, obligations, or liabilities resulting from negligence, malpractice or misconduct.
Characteristics of LLP :
1.Separate legal entity :
Like a company LLP also has a separate Legal Entity. So the partners and the LLP in are distinct from each other.This is like a company where members are different from the company.
2. No requirement of minimum capital :
In case of companies there should be a minimum amount of capital that should be brought by the members / owners who want to form it. But to start an LLP there is no requirement of minimum capital.
3.Minimum number of members :
To start an LLP at least 2 members are required initially. However, there is no limit on the maximum number of partners.
Tax implications :
1.LLP s are liable to pay tax as in the same case as Partnerships which means tax would be levied on the LLP and the partners would be exempt from Tax.
2.The Income Tax Return of llp shall be signed and verified by the designated partner.
If he / she is not there available due to any unavoidable circumstances then any partner can sign it.
Advantages of LLP over other form of organizations
1.Liability of each partner is limited to their representative.capital amount only.
2.Each partner is liable to the acts done by them only. Where in case of normal partnership partner’s liability is joint and several.
3.No complexity in compliance of various laws and regulations.
To know the limitations of LLP when compared to other form of organizations we have to draw the contrast between LLP and a join stock company, which can raise funds from public and the same is not possible to LLP.