What is a LLP?

A Limited Liabilty Partnership firm (LLP), introduced in 2008, is a partnership with features of a body corproate, thus providing perks of a private limited company but retaining characters of a partnership where  business and partners are considered as separate, however guided by terms of the mutually adopted partnership agreement.

What are the benefits of registering as an LLP over partnership firms under Indian Partnership Act, 1932?

• Limted Liability - In partnership firm, partners are personally liable for al the debts, claims of the business. The liablity of firm can extend to their personal property whereas, the liability of partners is limited in a LLP.
• Safeguard against wrong doings/ actions of other partners- In a LLP, partners are not responsible for negligence or misconduct or deafult of other partners in personal capacity whereas in general partnership firms, partners can be held responsible.
• Can hold a common seal if need be whereas general partnership firm cannot.

What if the difference beween a LLP and general partnership firm under Income Tax Act?

• Both general partnerships and LLPs are taxed at flat rate of 30%.
• Other provisions being same, benefit of presumptive taxation scheme i.e if turnover is below Rs. 2 crore in business or Rs. 50 lakh in case of profession, there is no need to maintain books of accounts or get accounts audited and income is computed at a specified rate (8% or 50%) is not avaiable for LLPs.

What is the minimum capital contribution required for LLPs?

There is no minimum capital contribution requirement. It can be registered even with Rs. 100 as total capital contribution.

What is the audit requirement for LLP?

• Accounts of an LLP are required to be audited when the turnover is Rs. 40 lakh or more or when the total capital contribution is Rs. 25 lakh or more.
• The auditor of an LLP is appointed annually by the designated partners.
• The first auditor is appointed before the end of the financial year. Subsequent appointment or reappointment of the auditors is made one month before the closing of the financial year by the designated partners.

In case I do not have DPIN, can i become partner in a LLP?

With effect from 2nd October 2018, if any of the partners do not have DIN / DPIN, he /she can be allotted DPIN at the time of formation and can become partner in LLP.