Limited Liability Partnership (LLP) advantages

September 2, 2009 at 10:28 am | Posted in Legal, limited liability partnership, LLP, Private limited company | 9 Comments
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Here is a useful article by Sharda Balaji, Founder, NovoJuris Services. NovoJuris is taking care of CS services for LifeMojo/iStrait.

“An LLP is indeed advantageous because of comparatively lower costs of formation, lesser compliance requirements, easy to manage and run and also easy to wind-up and dissolve, no requirement of minimum capital contributions, partners are not liable for the acts of the other partners and importantly no minimum alternate tax (as of date). But, LLP cannot raise money from the public,” stated Balaji, adding, “One other factor that is interesting is that, books of accounts have to be audited if the contribution is above Rs 25 lakh or if annual turnover is above Rs 40 lakh.”

Read the complete article here:  http://dqchannels.ciol.com/content/space/109082902.asp

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9 Comments »

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  1. What happens if one of the 2 directors in a pvt ltd company leaves it or dies? please throw some light on this scenario and related scenarios.

  2. @Emaque As far as I know, in that case, the shareholders are liable to appoint a director as soon as possible.
    If the company functions for more than 6 months without 2 directors, it is liable for a penalty by RoC.

  3. Also the liability of the shareholders becomes unlimited from limited if the number of Directors remain below the minimum limit for more than 6 months.

    For all your queries related to incorporation of Pvt. Ltd/ Public Ltd Company or LLP, you can contact at ca.bhavesh.savla@gmail.com

    Questions will be answered sooner or later but grant some time, please.

    Best regards

    CA. Bhavesh Savla

  4. hi sir i want to register my business but i dont know whether i should go for register it as foundation or LLP or PVT LTD or partnership firm. my business is of providing certificate courses like personality development etc. to schools in maharashtra (currently)(later i am thinking about providing same for schools of all other parts of india. i dont want to have any partner but for benefits of taxes and other i can put my parent’s names. one unexperienced lawyer suggesting me to register as partnership firm. but i am still confuse. i dont want any mandatory legal works such as maintaining accounts etc. i am d only one who is going to handle d entire business. plz suggest me most suitable form of registration of my business so that i wil get maximum benefits on taxes and other legal things. thanx in advance.

  5. @rohit
    I would suggest to go for partnership firm because there would be too many accounting and other formalities in LLP / Pvt Ltd company.

  6. @Rohit

    I assume that you r targeting a modest turnover and profits.
    For you, the costs of a pvt ltd company would be greater than the benefits, so don’t go for a pvt ltd company.
    So I would have suggested you to go for a normal firm.
    However, because now we have the option to form an LLP, I would strongly recommend LLP for you over a normal firm simply because the LLP restricts your liability to yr business assets.

    E.g If you open a Firm and God forbid but yr business doesn’t work, then your creditors can take even your personal assets. However if you have a LLP, then your personal assets like house, jewellery etc. are all protected in case of any loss.

    Cost of registering an LLP are quite less than that of Company. Also the Compliance requirements are lesser. But it has advantages of a Company like the limited liability and corporate entity.

    It also combines the benefits of partnership like tax advantages etc.

    You can request a free brochure on LLP at ca.bhavesh.savla@gmail.com

    Best regards

    CA. Bhavesh Savla

  7. i am in manufacturing business having good turnover with 100 % income tax exemption in north east in proprietorship basis , i want it to get into private limited co , to distribute income to my family member as a director , whether i shuld go for pvt ltd co , if yes wat areadvantage and disadvantage

  8. Hi Himanshu,

    I met with you to get associated with Lifemojo at your Bannerghata office, but unfortunately due to distance from my house at Bangalore it didn’t work. Now I am planning to start a business based at Kolkata along with my sister who is giving the lead to bring in tourists from foreign countries. Based upon the response I may increase the number of people or associates who may be my friends or relatives. Can you suggest me what type of company should I form? Since I am novice in accounts suggest me the best type.

    Regards,
    Ankita

  9. Hey Ankita!
    You should go with an LLP.
    Anything less than that (like partnership firm) would not bring the credibility. Anything more than that (like a private limited company) would bring a lot of overheads.

    All the best!


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