LLP means Limited Liability Partnership, which is almost similar to standard partnership. However, it differs in giving comparatively lesser or limited liabilities to the partners. In LLP, the members have flexibility so that they can leave the partnership without much of complexities. The members that are going to involve in LLP can complete the procedure in just one step. The step is filling an application and this application can be filled by themselves or with the help of any agent. All the members of LLP can participate in sharing their profits. If the business generates an income more than Rs.67000, then the LLP members have to register for VAT as they have to pay VAT.
How to Setup a Limited Liability Partnership
- The first step for Limited Liability Partnership is to fill an agreement, which is the deed of partnership.
- This deed of partnership requires the name of the person, address of the individuals, the capital they are contributing. It also includes certain rules and procedures that need to be followed in case if any individual leaves the deal.
- Articles or Memorandum of Association are not considered to form LLP. After the LLP registration, the company can immediately file annual returns and annual accounts.
- However, the deed of partnership requires three terms. They are: A registered address, A minimum of two members, An agreement legally approved between them. In case of absence of any of these three would result in failure of deed of partnership.
- This deed of partnership also involves the percentage of profits and other tax related issues among partners. Hence, the profits can be shared only based on the agreement.
- Another important thing to be considered in LLP registration is that there is no involvement of corporate tax in LLP.
Limited Liability Partnership ensures that the partners enter into an agreement. This agreement details out all the necessary requirements to form LLP. The members can be signed in the agreement only after they accept all the terms and conditions that are mentioned in it.