Why you should begin your Start-up with LLP registration?

in #llp-registration6 years ago (edited)

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It is said that-

Change is the only constant in the world…..

But, why have we mentioned it in this article? It's so because most of us believe that registering your company as a Private Limited would be the best start. However, nowadays, with the growing popularity of Limited Liability Partnership (LLP) and because of its amazing benefits, people are switching towards LLP registration.

LLP is a form of business structure and an upgraded version of Partnership Firm. The LLP structure is quite easy to form and covers all the advantages of a limited company. And, hence, because of the same, start-ups are nowadays more inclined towards limited liability partnership.

You can register your business as LLP under Limited Liability Partnership Act, 2008 which was enacted by the Legislature with an aim to introduce a type of business entity which can be easily managed and still had the benefits of limited liability and better credibility.

In this blog, mainly, we are going to discuss the advantages of LLP registration over the private limited company registration. Hence, without wasting any more time, let us learn the significant aspects of limited liability partnership registration.

Reasons why start-ups should choose LLP registration

As the name suggests, LLP registration offers limited liability to the entrepreneurs. Besides this, there are a plethora of other advantages that LLP offers to its registered users. They are as follows:

Tax Advantage

In a limited liability partnership, Partners can offer a loan to an LLP and it can provide loans to its partners. There aren’t any limitations or restrictions in receiving or lending loans. Furthermore, there is no dividend tax in LLP, however, in a private limited company, if you want to pull your profit from business profit, then you will have to pay the dividend tax. In short, dividend tax is exempted from tax in the case of an LLP which is undoubtedly a big advantage for the start-ups.

Regulatory compliances are less

One of the biggest advantages that start-ups can avail through registering their business with LLP is the fewer regulatory compliances. In an LLP, there’s no requirement for any audit by a Chartered Accountant if the business turnover is less than Rs. 40 Lakhs and capital contribution don’t exceed Rs. 25 Lakhs.

Continuity of existence


Again one of the most loved benefits of LLP. The life of business remains unaffected by the status of the Partner. Even after the death of the partner, the Limited Liability Partnership continues to exist. An LLP is a juristic person who can own property, car, building, and any other fixed assets in its name. Partners cannot claim upon the property of the limited liability partnership.

Limited liability

Liability of partners of the LLP (Limited Liability Partnership) firm is limited to their contribution in the firm. It implies that if the Limited liability Partnership incurs any loss and faces financial distress because of primary business activity, then the personal assets of the partners will not be at risk of being seized by the bank, creditors, and government.

Separate legal identity


Same as that of the private limited company, limited liability partnership has a separate legal entity from that of its designated partners. Because of this, businesses registered with LLP can acquire assets and property on its own name and can incur debts. It’s one of the major advantages as this will aid the partners to remain unencumbered by the liabilities of the business after LLP registration.

Penalties won’t arise


Most of the companies don’t or can’t pay to comply with MCA (Ministry of Corporate Affairs) regulations which can lead to heavy penalties of up to Rs. 1 lakh every year. With Limited Liability Partnership, it’s unlikely that you won’t be able to comply and there are a no such hefty compliances.

Final Words


From the above discussion, we can conclude that LLP registration could result in more effective and beneficial for start-ups. Hence, if you are seeking LLP registration through a consultant, then contact Swarit Advisors.

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