Since, Limited Liability Partnership is a hybrid of a company and a partnership and also are comparatively hassle-free in a day to day operations, as it provides the combination of benefits of both a company and a partnership to the management of the company. There are many LLP benefits which other forms of business do not get these are mentioned below:
The LLP benefits are:
The first and most important of LLP benefits is that there is no limited capital required against the firm so the Liability of the Partners is restricted towards their Contribution of capital so made. The Limited Liability Partnership can be easily formed with the help of the least possible capital.
No Limited Contribution
The second one in LLP benefits is to know which type of asset or capital to be contributed The contribution of the partners may consist of :
- Tangible Property
- Movable Property
- Immovable Property
- Intangible Property
There is no as such Assets/Property/Capital required to get registered for the Limited Liability Partnership. On the other hand to get registered for the Private Limited company the partners must contribute the minimum capital of Rs. 1 lakh and for the Limited Company the partners must contribute the minimum capital of Rs 5 lakh.
- The tax on LLP is treated as Partnership Firms for Income Tax w.e.f the assessment year 2010-11.
- No surcharge will be levied on Income Tax.
- the profit earned will be taxed in the hands of the LLP, not in the hands of the partners.
- Minimum Alternate Tax and Dividend Distribution Tax will not be applicable for LLP.
- Remuneration to partners will be taxed as “Income from Business & Profession”.
- Designated partners will be liable to sign and file the Income Tax Return.
- LLP shall not be eligible for presumptive taxation.
An incorporated LLP has perpetual succession. Notwithstanding any changes in the partners of the LLP, the LLP will be the same entity with the same privileges, immunities, estates, and possessions. The LLP shall continue to exist until its wound up by the provisions of the relevant law.
Easy to form
It is very easy to form a Limited Liability Partnership as the process is very simple and easy as compared to other companies and also does not involve much formality or documentation, in the terms of cost, the LLP is cost saving as it cost minimum fees of incorporation is just for Rs 800 and the maximum fees of incorporation costs only of Rs 5600.
Easy to manage
The LLP ACT 2008 provided LLP most of the freedom to manage its own affairs, all the partners can decide how to manage and run the LLP as it provides the liberty to manage it as per their will and fancies. The partners of the LLP can decide on their own rules of how the company will work.
- An LLP as a legal entity is capable of owning its funds and other properties.
- The LLP is the real person in which all the property is vested and by which it is controlled, managed, and disposed of properly.
- The property of LLP is not the property of its partners.
- The partners cannot make any claim on the property in case of any dispute among themselves.
Low registration cost
The cost charged for LLP Registration is very much low as compared with the private limited company and public limited company.
As compared to other forms of business the Limited Liability Partnership is the easiest form of business as it gets most of the benefits than other forms of business some are mentioned above.
Also, read the related topic- Steps to register Limited Liability Partnership (LLP)
Why LLP is better than Private Limited Company