Are you just bored of your boss’ whimsical attitude at work and start off afresh with something of your own? Are you among those young guns that have a vision of making a change and want to do something of your own, rather than wasting your valuable IQ in some MNC? If this be the case, then why not form a Limited Liability Partnership Company of your own? What? You’ve heard of this very phrase before but ain’t much sure of what it is? Well, not to worry, for we’re here to solve this issue of yours. Read on to the list to find all you need to know about LLP—
8. LLP Act
Before India, LLCs were available in the whole wide world. However, in India, they became legal on 1st April, 2009 when the Indian Government formulated the Limited Liability Partnership Act. However, this Act is applicable to small firms. And, if you’re thinking big, you will need to register your company with the Companies Act, 2013.
7. What are Limited Liability Companies?
A Limited Liability Company is one where the elements of corporate structure are blended into those of a partnership company. Being a “limited liability” enterprise means that the company is a separate legal entity from its owners and can own assets in its own name, and not in the name of the owners. And, in case of any legal discrepancies, it has the right to sue or to be sued.
6. How Many Types of LLP Companies can be there?
If you’re thinking of opening a LLP Business Venture, the first question you have to face will be whether your business venture should be a Private Limited Company or a Public Limited Company. This is, however, adjudged by the minimum capital requirement for the same. If your Authorized Share Capital is less than or equal to Rs. 100,000, then it’s a Private Limited Company, and if the same is around Rs. 500,000, then it’s adjudged under the Public Limited Companies.
5. Why Should You Go for It?
If you’re the owner of any LLP, it precisely means you’re the owner, and not any mere shareholders who cannot participate in the management of the company. Although there has to be a minimum of two partners involved, with no “maximum” requirements, each partner isn’t answerable for another partner’s faults and negligence.
4. What are the Rights of the Partners?
Although the main duties of the partners are provided by the house of Law, the rights, duties and other obligations of the partners actually work as per the agreement set between them. However, the best thing about LLP is that the liability of the partners is restricted to his/her contribution in LLP. This means that if you own an LLP with any friend of yours, you don’t have to show or highlight your own personal and filial assets to the partners and the Government. However, in case you’re engaged in fraudulent, you have to!
3. Is Audit Necessary for the Accounts?
Well, it is mandatory only if your annual turnover surpasses 40 lakhs, or if the individual contribution exceeds 25 lakhs. If none is the case, a LLP company should maintain a proper annual account that is accessible to all the partners.
2. And, What’s the Main Advantage of the LLP?
All said and done, the main advantage of a LLP Company remains that its cost of formation is much lower than any other form of business ventures, and comes with much less institutional requirements. Besides, especially in case of small scale enterprises, it’s very easy to operate, manage and even wind up.
1. How Can the Company be formed?
The legal procedure for setting up a LLP is also quite hassle free. You just have to decide on the partners (and, of course the mode of business) and sign the Memorandum as well as the Articles of Association and submit the Registrar the same along with the prescribed fees. Then the Registrar shall follow up with the proceedings and you just have to follow his/her instructions.