LLP- Limited Liability Partnership
A limited liability partnership is a type of company that enables the partners to handle their internal affairs in accordance with an agreement reached by both parties, much like in the case of a partnership firm. However, in an LLP, no partner is accountable for the autonomous or unapproved conduct of other partners, safeguarding the private assets of each member. An LLP must have a minimum of two partners, but there is no limitation for the number of partners. The idea of a Limited Liabilities Partnership was announced in 2008 through the Limited Liability Partnership (LLP) Act.
What is liability?
Liability is, to put it simply, something that a person or business owes, typically a monetary amount. A liability exists when you are in debt to an individual or company or any other entity after making a promise to pay them in the future. Essentially, an unpaid debt
Advantages of LLP :
Liability is something that a person or business owes, typically a monetary amount
A limited liability partnership is a type of company that enables the partners to handle their internal affairs in accordance with an agreement reached by both parties, much like in the case of a partnership firm.
The advantages of LLP are many but below we have mentioned the four significant advantages of LLP i.e. firstly, LLP can be registered by paying a very small amount as the cost of the registration process, is budget-friendly, secondly, it needs less compliance, thirdly the responsibilities of partners are limited, and fourthly that partners do not need much capital to start LLP.
The disadvantages of LLP are as follows:
The LLP has a High-income tax rate compared to other business types which are similar in nature.
In the LLP business, there is no equity investment as individual partners can get the shares only.
The most significant disadvantage that one should remember is that in LLP there is a penalty for non-compliance which increases the more it gets delayed.
The process for the registration of an LLP is as stated below:
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