Why setup an LLP?

Limited Liability Partnership is a common way to form a business wherein there are two or more people joining in to own and operate a single business. The people associated with the LLP enjoys certain wealth benefits which is one factor for people choosing LLP as their business form.

The major reason why you need to set up an LLP is the Tax benefits and the Limited Liability.

There are certain other benefits of LLP which makes it a recommended form of business;

• It is a renowned form of business that is been worked out in India successfully.
• The incorporation of LLP is easy.
• A Limited Liability Partnership is known by its name and not by the name of the partners, it is a separate legal entity and a Body Corporate with distinct legal entity.
• Liability of the partners are limited and minimal, since LLP & person are separate entities the liability for repayment of debts in case of mishap is not imposed on the partners and not even on the shareholders, they are liable only to their restricted shares.
• LLP is flexible to manage as by the LLP Act 2008, all the freedom is given to it for managing its own affairs. The partners are permitted to decide the way they want to run their company.
• Another interesting factor of LLP is that the ownership can be transferred easily.
• The tax benefits makes it beneficial for the entrepreneurs, LLP is not subjected to Dividend Distribution Tax whereas the others need to pay higher taxes. This benefits the partners while distributing profit among the partners.
• Funding is also easy for an LLP.
• the Audit is not compulsory but if the turnover exceeds Rs. 25 Lakhs/ Rs. 40 Lakhs then the account needs to be audited Annually.
• The Compliances are lesser for LLP as compared to other business forms.