Understand limited liability partnerships (LLPs).
The best way to understand an LLP is to start with a general partnership. A general partnership is a commercial legal entity formed by mutual agreement between two or more parties. This is a very technical way of saying that two or more people are working together to make money. General partnerships can be very informal. All it takes is common interests, perhaps a written agreement (not always), and a handshake.
Of course, the informality of an open trading company also has its downsides. The most obvious risk is that of legal liability. In an open trading company, all partners are jointly responsible in case of problems.
The actual details of the LLP depend on where you create it. However, as a general rule, your personal assets as a partner are protected from legal proceedings. In principle, you may lose assets within the partnership, but your liability is limited in the sense that you do not lose anything external (personal assets). Partnerships are the first target of any lawsuit, but if certain partners do something wrong personally, they can be held accountable.
Benefits of LLP
- Each partner of the LLP has limited liability. This means that you do not have to use your personal property to pay off the company's debts. Further, the Affiliate is not responsible for any fraud or misconduct of another Affiliate.
- The board of directors oversees the activities of management and makes all decisions of the company. Shareholders have much less say here compared to this board.
- For an LLP, auditors are not required to review the company's internal accounts.
Required Documents for LLP Registration
- PAN Card of all partners
- Address proof of all partners
- Utility bill of registered firm office
- Proof of land agreement or rental agreement
- Handling and submission of required documents before, during or after registration
- Full assistance from initiation of the process to delivery of documents to your door
- Immediate resolution of any questions or doubts that may arise throughout the registration process
Frequently Asked Questions
What Do You Mean by LLP?
An LLP is a limited liability partnership and each partner has limited personal liability for any liability or claim of the partnership. LLP partners are not responsible for the actions of other partners.
What Is the Difference Between a LP and LLP?
A limited partnership (LP) requires that at least one partner (called the general partner) have unlimited liability, and that limited partners aren't part of management. An LLP gives all partners limited liability.