{"id":19796,"date":"2020-11-19T15:47:15","date_gmt":"2020-11-19T10:17:15","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19796"},"modified":"2020-11-20T11:40:20","modified_gmt":"2020-11-20T06:10:20","slug":"do-you-want-to-choose-an-llp","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/","title":{"rendered":"Do you want to Choose an LLP? Know more about this!"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There are various forms of business present in the market to start with. However, the latest and beneficial among them are LLP (Limited Liability Partnership). LLPs are a flexible legal entity which allows partners to benefit from economies of scale by way of working together, reducing their liability for the actions of other partners. Being an entrepreneur you likely want to choose an LLP once you will know about the key factors of <a href=\"https:\/\/corpbiz.io\/llp-registration\"><strong>LLP registration<\/strong><\/a>. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/#Understand_the_Basic_Concept_why_to_choose_an_LLP\" >Understand the Basic Concept why to choose an LLP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/#Advantage_to_Choose_an_LLP\" >Advantage to Choose an LLP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/#Some_Important_reasons_that_One_will_choose_an_LLP\" >Some Important reasons that One will choose an LLP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understand_the_Basic_Concept_why_to_choose_an_LLP\"><\/span>Understand the Basic Concept why to choose an LLP<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Professionals that use LLPs tend to rely heavily upon\nreputation. Most of the LLPs are created and managed by the group of\nprofessionals who have experience with them. By pooling resources, the partners\nlower the cost of doing business while increasing the LLP&#8217;s capacity for\ngrowth. Most importantly, reducing costs allow partners to gain more profits\nfrom their activities than they could get individually.<\/p>\n\n\n\n<p>The partners in an LLP also have a number of junior partners\nin the firm who work for them. These junior partners are paid salary and they\nhave no stake or liability in the partnership. The important thing is that they\nare designated professionals qualified to do the work that partners bring in. This\nis the way that LLPs help the partners scale their operations. Junior partners\nand employees do the work and free up the partners to focus on bringing in new\nbusiness.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantage_to_Choose_an_LLP\"><\/span>Advantage to Choose an LLP<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The advantage of LLP has an ability to bring partners in and\nlet partners out. Because of the partnership agreement exists for an LLP,\npartners can be added or retired as outlined by an agreement. It becomes handy\nas an LLP can always add partners who bring existing business with them.\nUsually, a decision to add the existing partners requires approval from all.<\/p>\n\n\n\n<p>It has the flexibility of an LLP for certain type of professional that makes it superior option to any LLC or other corporate entity. Like LLC, the LLP itself is a flow-through entity for the tax purposes. It means the partners receive untaxed profits and must pay the taxes themselves. Both LLC and LLP are preferable to the corporation, which is taxed as an entity and then its shareholders are taxed again on its distributions.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/documents-for-llp-registration-in-india\/\">What are the Required Documents for LLP Registration in India?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Some_Important_reasons_that_One_will_choose_an_LLP\"><\/span>Some Important reasons that One will choose an LLP<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The some basic reasons that we must keep in mind while we choose an LLP are as follows:<\/strong><\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-52-1024x683.png\" alt=\"Some Important reasons that One will choose an LLP\" class=\"wp-image-19835\" width=\"557\" height=\"371\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-52-1024x683.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-52-300x200.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-52-768x512.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-52.png 1200w\" sizes=\"(max-width: 557px) 100vw, 557px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">It is easy to register an LLP<\/h3>\n\n\n\n<p>The basic requirement is of two partners out of which one\nhast to be a resident of India. A registered office must be within the\nterritory of India.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No minimum requirement of capital for LLP<\/h3>\n\n\n\n<p>People usually face a capital crunch while setting up a new\nbusiness hence it is beneficial that cost of registering the LLP is less as\nthere is no minimum capital requirement for setting up an LLP, even a person\ncan start business with the capital amount of Rs 5000.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">LLP as Easiest form of business &amp; Easy to operate<\/h3>\n\n\n\n<p>LLP is the easiest form of business as there are not as many\nobligations on the partners. All duties and responsibilities of partners are\nmentioned in a partnership deed. It is easy to operate and conduct. In a\ncompany, one is required board resolutions to be passed for taking any decision.\nHowever, no such requirement as such in LLP, though a decision is still taken\nby a majority or in consonance with an LLP agreement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Lesser compliances than a Company<\/h3>\n\n\n\n<p>Once you register an LLP, there are not many compliances one\nneed to follow. For new businesses, LLP is perfect start with. No need to worry\nabout a general meeting, annual general meeting, board meetings etc. One can\nconduct your business peacefully without many formalities. Similarly, partners\ncan decide and organize any internal management mutually, which will require an\nLLP agreement. Only two forms are required to be filed annually, i.e. Form 8 and\nForm 11.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Separate legal entity means separate person in the eyes of the law<\/h3>\n\n\n\n<p>As the separate legal entity, you have the power to sue\nunder the LLP and not partners. LLP can sue &amp; be sued by others. The\nPartners will not be liable in a case of LLP in any legal case.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Protection from debts Personal assets remain safe<\/h3>\n\n\n\n<p>The partners are protected from debts of the LLP. In other\nwords, partners will not be responsible personally for debts of the business.\nIt is another example of limited liability. If business is under debt that has\nto be returned then you being a partner will not be held responsible for it\npersonally.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Partner is Liable only for his Own Action and not for others<\/h3>\n\n\n\n<p>It is the most sensible and reasonable advantage of an LLP.\nThe law says that if in LLP any partner commits the fraud then the other\npartner cannot be held responsible for his act of doing. Similarly, if any of\npartners was negligent or careless and some loss was incurred then that\nparticular partner has to bear those losses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Separate Cibil score<\/h3>\n\n\n\n<p>In LLP partner is an agent of business hence the cibil score\nof business and partners are different. The partners individually will have the\ndifferent cibil score and the LLP will have different. Hence, even if partners\nhave a bad cibil score, the same will not have an impact on the cibil score of\nan LLP. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Loan to partners<\/h3>\n\n\n\n<p>In company law, the company cannot provide a loan to its\ndirectors as it is restricted by law. However, in LLP, this is not the case.\nUnder LLP, business can provide a loan to its partners if the same is allowed\nby an LLP agreement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Easy to wind up<\/h3>\n\n\n\n<p>If anything goes wrong in LLP then one can plan to end the business\/partnership without as many formalities. the winding up of an LLP can be either can be done voluntarily or by <em><strong>tribunal<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Tribunal\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Since there are a lot of startups are emerging in India day by day it is important to know that what is best for us. Starting any new business is a very huge step and it should not weigh you down in any way. So, let us make this step a happy and easy journey for you at <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a>.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/apply-for-llp-registration-in-india\/\">How to Apply for LLP Registration in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are various forms of business present in the market to start with. However, the latest and beneficial among them are LLP (Limited Liability Partnership). LLPs are a flexible legal entity which allows partners to benefit from economies of scale by way of working together, reducing their liability for the actions of other partners. Being [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":19807,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[155],"tags":[1228],"acf":{"service_id":"3"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":3779,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19796"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19796"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19796\/revisions"}],"predecessor-version":[{"id":19838,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19796\/revisions\/19838"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19807"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19796"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19796"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19796"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}