LLP
This query is : Resolved
11 September 2010
What is LLP & What are its basic requirements???
any partnership firm can get converted into LLP?? If Yes, then how it can be???
any partnership firm can get converted into LLP?? If Yes, then how it can be???
11 September 2010
Limited Liability Partnership. Another name for a Limited Liability Company, often used by professional associations. The partner or investor's liability is limited to the amount he/she has invested in the company.
11 September 2010
A limited liability partnership (LLP) is similar to a general partnership, except the partners are not personally liable for negligent acts conducted by other partners or employees not under their supervision.
This is different from a general partnership, in which each partner is liable for the debts and obligations of the business as well as the malpractice of any other partner.
Income taxes in an LLP are passed through the business and reflected on the partners' individual tax returns. Because of the limited liability of each partner and pass-through tax status, LLPs are a very popular business structure.
This is different from a general partnership, in which each partner is liable for the debts and obligations of the business as well as the malpractice of any other partner.
Income taxes in an LLP are passed through the business and reflected on the partners' individual tax returns. Because of the limited liability of each partner and pass-through tax status, LLPs are a very popular business structure.
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11 September 2010
There are certain disadvantages to forming an LLP, however. For example, limited partners lose limited liability if they participate in the daily operation of the business, and the LLP must pay an annual fee to the state based on the number of partners. Also, in certain states, LLPs are only available for particular types of businesses, such as law and accounting firms.
11 September 2010
omparison Between LLP / Company / Partnership
S.No.
Conditions
LLP
Company
Partnership Firm
1.
Registration
To be registered with Registrar of LLP under LLP Act 2008
To be registered with Registrar of Companies under Companies Act 1956.
Registration is optional
2
Name
Name should contain ‘Limited Liability Partnership’ or ‘LLP’ as last words
Name should contain ‘Limited’ / ‘Private Limited’ as last words
Any name as per choice
3.
Legal entity
LLP is a separate legal entity registered under LLP Act
Company is a separate legal entity regisered under Companies Act, 1956
Not a separate legal entity
4.
Formation Cost
The cost of Formation is lesser that of formation of Company.
The cost of Formation is higher than that of formation of LLP
The Cost of Formation is negligible.
5.
Formation by Foreign Nationals
Foreign Nationals alone can not form a LLP.
Foreign Nationals alone can form a Company
Foreign Nationals can not form Partnership Firm in India.
6.
Minimum Number of Members
Minimum 2 partners
Minimum 2 in case of Private Company 7 in case of Public Company.
2
7.
Management Team
Minimum 2 Designated partners
Minimum 2 / 3 Directors
No requirements
8.
Administration.
Designated Partners are responsible for day to day operations and statutory compliances
Directors are responsible for day to day operations and statutory compliances
Partners are responsible for day to day operations and statutory compliances
9.
Remuneration to Managerial Personnel
Remuneration to partners will be determined on LLP Agreement
Remuneration to Directors of Public Companies are governed by Companies Act
The firm can pay remuneration to its partners
10.
Liability of Partners / Members
Limited to the extent of contribution towards LLP
Limited to the amount of share capital agreed to be contributed on each share
Partners have unlimited liability
11.
Capital Contribution
Determined by partners as per the LLP agreement.
Limited to the unpaid amount of share capital agreed to be contributed
Unlimited may extend to their personal assets
12.
Tax Liability
Notification from IT Department awaited
Income of Company is Taxed at a Flat rate of 30% Plus surcharge as applicable.
Income of Partnership is Taxed at a Flat rate of 30% Plus surcharge as applicable.
13.
Transfer of ownership Rights
Ownership transfer is governed by the LLP Agreement.
Ownership is easily transferable by transfer of shares
Not transferable.
14.
Statutory Meetings
There is no requirement to hold any meeting
Board Meetings and General Meetings are required to be conducted as per Companies Act
There is no provision in regard to holding of any meeting
15.
Maintenance of Statutory Records / Minutes Book
Required to maintain books of accounts.
Required to maintain books of accounts, statutory registers, minutes etc.
Required to maintain books of accounts as Tax laws
16.
Annual Filing
Annual Statement of accounts and Solvency & Annual Return needs to be filed every year.
Annual Accounts and Annual Return needs to be filed with the Registrar of Companies
No return except Tax returns
17.
Agreements / Contracts with Partners/Director
Partners are free to enter into any contract with LLP
There are restrictions for contracts in which directors are interested.
Partners are free to enter into any contract partnership
18.
Reputation
LLP enjoys higher reputation compared to Partnership as it is registered and regulated by LLP Act
Due to Stringent Compliances & disclosures under various laws, Companies enjoys high degree of creditworthiness
Creditworthiness of firm depends upon goodwill and creditworthiness of its partners
19.
Dissolution
Voluntary or by order of National Company Law Tribunal.
Voluntary or by order of National Company Law Tribunal.
S.No.
Conditions
LLP
Company
Partnership Firm
1.
Registration
To be registered with Registrar of LLP under LLP Act 2008
To be registered with Registrar of Companies under Companies Act 1956.
Registration is optional
2
Name
Name should contain ‘Limited Liability Partnership’ or ‘LLP’ as last words
Name should contain ‘Limited’ / ‘Private Limited’ as last words
Any name as per choice
3.
Legal entity
LLP is a separate legal entity registered under LLP Act
Company is a separate legal entity regisered under Companies Act, 1956
Not a separate legal entity
4.
Formation Cost
The cost of Formation is lesser that of formation of Company.
The cost of Formation is higher than that of formation of LLP
The Cost of Formation is negligible.
5.
Formation by Foreign Nationals
Foreign Nationals alone can not form a LLP.
Foreign Nationals alone can form a Company
Foreign Nationals can not form Partnership Firm in India.
6.
Minimum Number of Members
Minimum 2 partners
Minimum 2 in case of Private Company 7 in case of Public Company.
2
7.
Management Team
Minimum 2 Designated partners
Minimum 2 / 3 Directors
No requirements
8.
Administration.
Designated Partners are responsible for day to day operations and statutory compliances
Directors are responsible for day to day operations and statutory compliances
Partners are responsible for day to day operations and statutory compliances
9.
Remuneration to Managerial Personnel
Remuneration to partners will be determined on LLP Agreement
Remuneration to Directors of Public Companies are governed by Companies Act
The firm can pay remuneration to its partners
10.
Liability of Partners / Members
Limited to the extent of contribution towards LLP
Limited to the amount of share capital agreed to be contributed on each share
Partners have unlimited liability
11.
Capital Contribution
Determined by partners as per the LLP agreement.
Limited to the unpaid amount of share capital agreed to be contributed
Unlimited may extend to their personal assets
12.
Tax Liability
Notification from IT Department awaited
Income of Company is Taxed at a Flat rate of 30% Plus surcharge as applicable.
Income of Partnership is Taxed at a Flat rate of 30% Plus surcharge as applicable.
13.
Transfer of ownership Rights
Ownership transfer is governed by the LLP Agreement.
Ownership is easily transferable by transfer of shares
Not transferable.
14.
Statutory Meetings
There is no requirement to hold any meeting
Board Meetings and General Meetings are required to be conducted as per Companies Act
There is no provision in regard to holding of any meeting
15.
Maintenance of Statutory Records / Minutes Book
Required to maintain books of accounts.
Required to maintain books of accounts, statutory registers, minutes etc.
Required to maintain books of accounts as Tax laws
16.
Annual Filing
Annual Statement of accounts and Solvency & Annual Return needs to be filed every year.
Annual Accounts and Annual Return needs to be filed with the Registrar of Companies
No return except Tax returns
17.
Agreements / Contracts with Partners/Director
Partners are free to enter into any contract with LLP
There are restrictions for contracts in which directors are interested.
Partners are free to enter into any contract partnership
18.
Reputation
LLP enjoys higher reputation compared to Partnership as it is registered and regulated by LLP Act
Due to Stringent Compliances & disclosures under various laws, Companies enjoys high degree of creditworthiness
Creditworthiness of firm depends upon goodwill and creditworthiness of its partners
19.
Dissolution
Voluntary or by order of National Company Law Tribunal.
Voluntary or by order of National Company Law Tribunal.
14 September 2010
Kindly visit the site below for full knowledge of LLP:
www.llponline.in
www.llp.gov.in
www.llponline.in
www.llp.gov.in
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