Advantages And Disadvantages Of Llp Registration

By Author: Janvi sharma
Total Articles: 6
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Limited Liability Partnership is different from its partners. It will not wind up in case of the death of any partners. Just like a public company, LLP will also run after the death or retirement of any partner.

Advantages of LLP
Many small companies and startups choose the option of forming an LLP. There are numerous benefits of Advantages of LLP such as:

1. Limited liability
One of the major benefits of LLP is that every partner has limited liability. Partners are not responsible to pay in case of misconduct. One of the biggest LLP advantages is limited liability and so many startups choose this option as it is safer than partnership firms or other options. Personal assets of any partner are not at risk in case of Limited Liability Partnership (LLP) registration.

2. No limit on capital to invest
You can form an LLP with any amount of capital. One of the major LLP benefits is that you can invest even a small amount of capital in LLP. This is the reason why many small companies choose to do online LLP Registration because they have low capital to invest. Even partners can contribute ...
... their tangible or intangible assets in the formation of LLP.

3. Separate legal status
There is one more LLP registration advantage for the firm. LLP is different from its members and will get a distinct identity on registration. It is a benefit for both the firm and its members. LLP can enter into contracts or buy or sell properties in its name by gaining legal status. On the other hand, members are not liable to contribute in case of loss in the company.

4. Low cost of registration
One of the major advantages of LLP Registration is that it has a lower registration cost than other firms. Even companies and startups with less capital can form an LLP with a minimum amount.

5. No limit on maximum partners
There are some other LLP registration Benefits such as no limit on maximum partners. Minimum 2 partners are required to register an LLP. There is no limit on maximum partners in LLP. Private companies or partnership firms cannot have more than 200 members. So, it is a better option for small companies to start an LLP.

6. No audit formality
Partnership firms, public, private, and many other companies have to get auditing of their accounts. But it is not the same in the case of LLP. There is no requirement of audit in the case of LLP. However, LLP must do a tax audit under 2 conditions which are as follows:

• If the contributions of the firm increase more than INR 25 lakhs or
• If the annual turnover of the firm increases more than INR 40 lakhs

7. Easy to withdraw profits
LLP Registration Online in India has several benefits for the partners as well as the firm. In the case of private or public companies, the owners have to pay a dividend distribution tax of 15% to withdraw profits. It is not the same in the case of an LLP firm. Partners of LLP can withdraw profits easily without paying any dividend distribution tax.

Disadvantages of LLP
We discussed all the benefits of forming an LLP. Now, let us further discuss the disadvantages of LLP in the below section:

 Chances of quick closure of LLP
There are a minimum of 2 partners in LLP. So, if one partner leaves the firm, retires, or dies, the firm will be closed forever. It is one of the biggest disadvantages of LLP Registration as compared to other companies and firms.

 Public disclosure of partner’s income
A major disadvantage of LLP is that the financial accounts are given to Companies House for public record. These accounts may disclose the income of each partner of LLP. This practice might increase risk in the company.

 Compulsory annual filing
Every LLP has to file an income tax return as well as an MCA annual return every year irrespective of income earned during the year. So, if LLP does not earn income, it is still required to do annual filing. In case of failure to file annual income, it has to pay a fine of INR 100 every day for form 8 and form 11 respectively. This penalty can even touch lakhs and crores in case of non-filing of annual returns.