{"id":2768,"date":"2018-07-14T11:02:02","date_gmt":"2018-07-14T11:02:02","guid":{"rendered":"https:\/\/companyregistrationonline.in\/?p=2768"},"modified":"2025-06-30T08:09:42","modified_gmt":"2025-06-30T08:09:42","slug":"advantages-of-llp","status":"publish","type":"post","link":"https:\/\/companyregistrationonline.in\/blog\/advantages-of-llp\/","title":{"rendered":"Advantages of LLP (Limited Liability Partnership)"},"content":{"rendered":"<p data-fontsize=\"24\" data-lineheight=\"36\">Before discussing the advantages of LLP let us first understand what is <a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\">LLP<\/a>.<\/p>\n<h2 style=\"text-align: justify\" data-fontsize=\"24\" data-lineheight=\"36\"><strong>What is LLP?<\/strong><\/h2>\n<p>LLP short for <a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\">Limited Liability Partnership<\/a> is a hybrid of a traditional partnership and a <a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\">private limited company<\/a> with limited liability and perpetual succession, governed by the LLP Act, 2008, and <a href=\"https:\/\/companyregistrationonline.in\/blog\/llp-agreement\/\">LLP Agreement<\/a>.<\/p>\n<p style=\"text-align: justify\">LLP combines the benefits of both partnerships as well as the company&#8217;s form of business. The following are the points that cover basic features to give you a better understanding of <a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\">LLP<\/a> (Limited Liability Partnership) :<\/p>\n<ul style=\"text-align: justify\">\n<li><a href=\"https:\/\/companyregistrationonline.in\/llp-registration\/\">LLP registration<\/a> is governed under the<a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\"> Limited Liability Partnership<\/a> Act, 2008.<\/li>\n<li>LLP is the form of business where the features of a partnership are combined with a company.<\/li>\n<li>The liability of each partner is limited to the extent of his\/her contribution\/share<\/li>\n<li>\u00a0It is known as\u00a0a hybrid between a company and a partnership as <a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\">LLP<\/a> contains elements of both a company and a partnership<\/li>\n<\/ul>\n<h3 style=\"text-align: justify\"><strong>Need for LLP in India<\/strong><\/h3>\n<p style=\"text-align: justify\">Earlier there were only two forms of Organisation in India:<\/p>\n<ol style=\"text-align: justify\">\n<li>Limited Liability Entities (Partnership\/Proprietorship)<\/li>\n<li>Unlimited Liability Entities(Company)<\/li>\n<\/ol>\n<p style=\"text-align: justify\">While Unlimited Liability Entities such as partnerships were easy to register but they suffered the disadvantage of unlimited liability. Therefore, there was a need for a single entity that could combine the advantages offered by both these forms of organizations. LLP in India came into existence in the year 2008 with the LLP Act. Since then it has become a preferred form of business.<\/p>\n<p style=\"text-align: justify\"><a href=\"https:\/\/companyregistrationonline.in\/llp-registration\/\"><span style=\"color: #3366ff\">LLP<\/span><span style=\"color: #3366ff\"> regi<\/span><span style=\"color: #3366ff\">stration<\/span><\/a> is easier with post-registration compliance less in comparison to a body corporate and unlike partnership where liability is unlimited LLPs limit the liability of partners to the extent of their capital contribution.<\/p>\n<h3 style=\"text-align: justify\"><strong>Advantages of LLP<\/strong><\/h3>\n<p style=\"text-align: justify\"><img decoding=\"async\" class=\"wp-image-2815 aligncenter\" src=\"https:\/\/companyregistrationonline.in\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa-300x106.jpg\" alt=\"advantages of LLP\" width=\"577\" height=\"204\" srcset=\"https:\/\/companyregistrationonline.in\/blog\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa-200x71.jpg 200w, https:\/\/companyregistrationonline.in\/blog\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa-300x106.jpg 300w, https:\/\/companyregistrationonline.in\/blog\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa-400x142.jpg 400w, https:\/\/companyregistrationonline.in\/blog\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa-600x213.jpg 600w, https:\/\/companyregistrationonline.in\/blog\/wp-content\/uploads\/2018\/07\/image_big_1268_59df3e6c2ddaa.jpg 750w\" sizes=\"(max-width: 577px) 100vw, 577px\" \/><\/p>\n<p style=\"text-align: justify\">The following are the advantages of LLP:-<\/p>\n<h3 style=\"text-align: justify\"><strong>1. Limited Liability<\/strong><\/h3>\n<p style=\"text-align: justify\">One of the best advantages of LLP is that the liability of each partner is limited to the extent of his\/her contribution\/share. In the sole proprietorship or the traditional partnership firm, the personal assets of the owner or partner could be at risk if there is any loss to the business. Therefore LLP helps the partners to be free from personal liabilities. In case of an LLP becomes insolvent and is wound up, only the assets of the LLP are used to clear the debts. The partners have no personal liabilities. Also, they are not made bankrupt and are free to operate as credible businessmen.<\/p>\n<h3 style=\"text-align: justify\"><strong>2. Separate Legal Entity<\/strong><\/h3>\n<p style=\"text-align: justify\">LLP has considered as a separate legal entity i.e. it has a separate existence from its partners. LLP can sue and be sued in its own existence. Thus, the entry and exit of the partners do not affect the LLP. It is because it incorporates various stakeholders such as Suppliers, Customers, shareholders, etc. It provides flexibility while dealing and signing legal contracts. Larger organizations will prefer dealing with corporate entities than proprietorship\/partnership organizations.<\/p>\n<h3 style=\"text-align: justify\"><strong>3. The audit is not Compulsory<\/strong><\/h3>\n<p style=\"text-align: justify\">All limited companies require auditing for their accounts whether the <a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\">private limited company<\/a> or public and irrespective of their share capital. But in the case of LLP, it is not mandatory. This is perceived to be a significant compliance benefit. A <a href=\"https:\/\/companyregistrationonline.in\/blog\/limited-liability-partnership\/\">limited liability partnership<\/a> requires to get the audit only in the case that:<\/p>\n<ol style=\"text-align: justify\">\n<li>The contribution of the<strong> LLP<\/strong> exceeds Rs. 25 lakhs or<\/li>\n<li>The annual turnover of the LLP exceeds Rs. 40 lakhs<\/li>\n<\/ol>\n<h3 style=\"text-align: justify\"><strong>4. Dividend Distribution Tax (DDT) is not applicable<\/strong><\/h3>\n<p style=\"text-align: justify\">In the case of a company, if the owners have to withdraw profits from the company then an additional tax liability in the form of DDT( Dividend Distribution Tax) @ 15% (plus surcharge &amp; education cess) is payable by the company. But in the case of LLP, no such tax is payable and partners can withdraw profits easily. So, This feature makes it an ideal option for the entrepreneurs.<\/p>\n<h3 style=\"text-align: justify\"><strong>5. Lower Compliance Burden Resulting in Savings<\/strong><\/h3>\n<p style=\"text-align: justify\"><a href=\"https:\/\/companyregistrationonline.in\/private-limited-company-registration\/\">Private ltd companies<\/a> require to do a minimum of 8 to 10 compliances approximately per annum. But in the case of a Limited Liability Partnership. it requires to file only the Annual Return &amp; a Statement of Accounts &amp; Solvency.<\/p>\n<p>Read:\u00a0<a href=\"https:\/\/companyregistrationonline.in\/blog\/annual-llp-compliances-2\/\">Annual Compliances of LLP<\/a><\/p>\n<h3 style=\"text-align: justify\"><strong>6. No minimum capital contribution required<\/strong><\/h3>\n<p style=\"text-align: justify\">The private limited company requires at least\u00a0Rs. 1 lakh as minimum capital contribution whereas there is no minimum capital required to form an LLP.\u00a0 Even the contributions could be made in installments which makes it an ideal option for the small entrepreneurs\/startups.<\/p>\n<h3 style=\"text-align: justify\"><strong>7. Easy to Form<\/strong><\/h3>\n<p style=\"text-align: justify\">It is very easy to form, as the <span style=\"color: #3366ff\"><a style=\"color: #3366ff\" href=\"https:\/\/www.legalraasta.com\/llp-registration\/\">LLP registration<\/a> <\/span>process is very simple. Also, it does not involve much formality as compared to Companies. Moreover, in terms of cost, the minimum fees of incorporation are as low as Rs 800 and the maximum is Rs 5600 which is much lesser than other companies&#8217; registration processes.<\/p>\n<h3 style=\"text-align: justify\"><strong>8. <\/strong><strong>Easy Transferable <\/strong><strong>Ownership<\/strong><\/h3>\n<p style=\"text-align: justify\">In LLP, it is easy to become a Partner or leave when the partner wants. Also, it is easier to transfer the ownership by the <a href=\"https:\/\/companyregistrationonline.in\/blog\/llp-agreement\/\">terms of the <\/a><span style=\"color: #3366ff\"><a href=\"https:\/\/companyregistrationonline.in\/blog\/llp-agreement\/\">LLP Agreement<\/a><\/span> It does not affect the LLP.<\/p>\n<h3 style=\"text-align: justify\"><strong>9. Taxation<\/strong><\/h3>\n<p style=\"text-align: justify\">Another main benefit of <a href=\"https:\/\/companyregistrationonline.in\/llp-registration\/\">LLP incorporation<\/a> is the taxation of an <strong>LLP<\/strong>. It taxes at a lower rate as compared to Company. Moreover, LLP is also not subject to Dividend Distribution Tax as compared to a\u00a0 company, so there will not be any tax while you distribute profit to your partners.<\/p>\n<h3 style=\"text-align: justify\"><strong>10. Raising Money<\/strong><\/h3>\n<p style=\"text-align: justify\">In a small business like sole proprietorship or partnership, it can be difficult to arrange the required capital for them. But LLP can attract finance from PE Investors, financial institutions, etc like other companies.<\/p>\n<p>Thus, in conclusion, the main advantages of LLP being Limited Liability, Low set-up cost, low compliances cost as compared to Private Limited Company, Formal set up as compared to the partnership.<\/p>\n<p>Now easily register your LLP with <a href=\"https:\/\/companyregistrationonline.in\/\">Company Registration<\/a>.<\/p>\n<p>Related Articles :<\/p>\n<p><a href=\"https:\/\/companyregistrationonline.in\/blog\/difference-between-private-limited-company-with-llp\/\">Difference between Private Limited Company and LLP\u00a0<\/a><\/p>\n<p><a href=\"https:\/\/companyregistrationonline.in\/blog\/preference-llp-over-partnership-registration\/\">LLP over Partnership<\/a><\/p>\n<p><a href=\"https:\/\/companyregistrationonline.in\/blog\/advantages-of-private-limited-company\/\">Advantages of Private Limited Company<\/a><\/p>\n<p class=\"entry-title fusion-post-title\" data-fontsize=\"30\" data-lineheight=\"37\"><a href=\"https:\/\/www.legalraasta.com\/blog\/llp-better-private-limited-company\/\">Why LLP is better than Private Limited Company<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before discussing the advantages of LLP let us first understand what is LLP. What is LLP? LLP short for Limited Liability Partnership is a hybrid  [&#8230;]<\/p>\n","protected":false},"author":5,"featured_media":2807,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[559],"tags":[418,81,48,34,505,503,38,260,508,506,507,504],"class_list":["post-2768","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-llp","tag-agreement-in-limited-liability-partnership","tag-difference-between-llp-and-private-limited-company-and-llp","tag-limited-liability-partnership","tag-llp","tag-llp-act-2008","tag-llp-benefits","tag-llp-registration","tag-mca","tag-mca-llp","tag-registered-partnership","tag-roc","tag-why-choose-llp"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Advantages of LLP Registration | Why Choose LLP Partnership<\/title>\n<meta name=\"description\" content=\"One of 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