Benefits of LLP Registration
Limited Liability Partnerships (LLPs) offer unique advantages for startups, professionals, and growing businesses:
- Limited Liability: LLP registration provides partners with limited liability of the partners, protecting personal assets from business debts and liabilities.
- Separate Legal Entity: LLP has a separate legal entity, which enables it to enter contracts, own assets, and sue or be sued in its own name independently of its partners. It is suitable for startups.
- Flexible Management Structure: LLPs allow the terms of management and operations to be structured according to the LLP agreement, wherein the partners have freedom to determine roles, duties, and decision-making terms.
- Minimum Compliance Burden: LLPs have less compliance compared to companies, minimising the administrative costs and burdens. LLPs are exempted from the requirement of holding annual general meetings (AGMs) and also have lessened audit requirements.
- Tax Efficiency: LLPs are subject to taxation as partnerships, and profits are shared with partners at their respective tax slabs. Double taxation of company profits and dividends is thus circumvented.
- Perpetual Succession: LLPs have perpetual succession, meaning continuity despite the change in partners through retirement, resignation, or death.
- Easy Transferability of Ownership: Transfer of interests in an LLP is made easy as per the LLP agreement, allowing for change in ownership and investment without impacting the LLP operations.
- Credibility and Trust: Registration as an LLP increases credibility and trust with stakeholders, such as clients, suppliers, and investors, through its established legal status and limited liability format.
- Access to Funding: LLP registration enhances access to finance and funding sources, such as bank loans, venture capital, and government schemes, improving growth potential.
- Global Recognition: LLPs are globally recognised, making it easier for companies to expand outside their home countries and collaborate with foreign companies under bilateral and multilateral arrangements.