Benefits of An Limited Liability Partnership (LLP)

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When it comes to registering a business as an LLP, the major feature is ‘limited liability’. This means the members of this firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and the partners are is protected if the business becomes bankrupt. Now let’s get into the benefits of registering a company as an LLP.

Separate Legal Entity: An LLP is a separate legal entity from its partners. Each partner can sue the other in case such a situation arises. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave the business, but the business remains the same. A term of dissolution has to be mutually agreed upon for the firm to dissolve.

Flexible Agreement: Transferring the ownership of an LLP is also very simple. A person can quickly be inducted in as a designated partner and the ownership switches to him/her.

Suitable For Small Businesses and Startups: LLPs having a capital amount less than Rs. 25 lakhs and turnover below Rs.40 lakhs per year do not require any formal audits. This makes registering an LLP more beneficial for small businesses and startups.

An LLP can own or acquire property because it is recognized as a juristic person. That is a body recognized by the law as being entitled to rights and duties in the same way as a natural or human person. However, the partners of the LLP cannot claim the property as theirs.

No Limit On The Number Of Business Owners: LLPs may have any number of partners starting from two. There is no limit on the maximum number of partners in LLP can have.

Limited Liability: LLPs exist as distinct legal structures separate from their owners. All the obligations either for repayment of debts or lawsuits incurred by LLP, lie on the firm and not on the owners.