Recently, everyone in the market/industry wants to turn up secure and safe and for that they want themselves worked under a registered legal system prescribed by the government to make their business grow.
Also, have you recently felt something different about new start-ups? Most of them have started opting for Limited Liability Partnership (LLP). So what really is Limited Liability Partnership or LLP? Why most of the new people in the industry try to choose LLP or whosoever working under any Legal entity tries to convert its legal entity into LLP.
As the law defines, an LLP is: Limited Liability Partnership
A corporate business facilitator that enables professional expertise and entrepreneurial initiative to combine and operate in flexible , innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership”.
In simple words, if you choose to have your company registered as an LLP you have the freedom to drive the internal forces of your company operations as your like with limited liability and the members of your company can internally organize a partnership as well.
A Limited Liability Partnership is nothing but a mid-way between sole Companies and Partnerships.
Being in an LLP means that the entity and the partners are two separate functions and to register an entity as an LLP, you must have minimum two partners.
The Benefits are described hereunder:
There is no minimum amount of capital required for contribution. While an LLP has these features, there are a few benefits as well. The liability of each partner becomes limited which may be written in the agreement at the time of registration, and the restrictions on an LLP is less as compared to a company by the government. The cost of formation is low, and the partners are only liable for their own acts and not for the acts of others.
Now that you know what an LLP is and how can it be beneficial to you, let us understand what the LLP formation procedure in India is. What all do you need for before the procedure begins:
Form 3 & 4 can also be filed post incorporation within 30 days. Ensure that every detail that you have incorporated in your LLP agreement is already consulted with someone having a legal experience. Every clause such as the goodwill clause or the cessation of LLP partners and many more such clauses must be carefully included with no errors in the agreement.
It is not as such a complicated process, and definitely not especially when you are looking forward to having a luxurious entity of your own.