For Start-Up, is Limited Liability Partnership a Good Choice?

Initiating and Registering a Start-up a daunting task.

Did you know that India presents the third largest start-up eco system in the world? With so many successful unicorns across disparate industries, it is but natural that there are many out there with a bright idea and a start-up dream. Unfortunately, many want to be successful entrepreneurs but when they go about understanding the registration process and legalities, they back track.

Is that not a sad prospect? For all we know that shelved idea and that business that never got started might have been the next Uber or Swiggy, initiatives that changed the way we travel and eat out. That is when legal experts can come into play and see to it that no idea is left unattended, just because of the anxieties involved in getting it going.

Can a start-up be registered as an LLP?

The major purpose stumbling block is getting the start up registered. The uninitiated might have myriad questions about how exactly are companies formed and registered. They are sure to get stumped by just knowing how many different ways a start up can be registered. More often than not the advice would be to register it as an LLP.

Yes, you must know that for a start-up, an LLP behaves as the most viable corporate entity. This offers the best of both the worlds; the limited liability of a private limited company as well as the flexibility of a partnership firm.

What is a Limited Liability Partnership (LLP)?

An LLP is registered with the Ministry of Corporate affairs. LLP s allow a partnership structure wherein each partner’s liability is limited by the amount he/she has invested in the business. This way the risk is spread over the partners. This concept of a limited liability partnership in India started from 2008.Here all partners are the agents of the LLP and the actions of one partner do not bind the others. Such a start-up must have a minimum of two partners and at least two individuals as designated partners.

Advantages of choosing the LLP

The main advantage of LLP start up is that the compliance requirement is much lesser compared to a company registration. Also,

·         LLP affords a perpetual existence for the start up

·         The start-up can enter contacts on its own

·         It can purchase or hold property on its own

·         It is easy to change partners

·         Income of partners is not taxable

·         Dividends distribution is exempt under section 40B

·         Additional tax breaks

·         Easier to manage as board of directors have more power

·         Individual skills of partners can be leveraged successfully 

·         Division of labour can be adequately chalked out.

·         Lower compliance fees

·         Transfer of ownership is a simple process

·         No audit of books (till revenue crosses 40 lakhs). The LLP must only file the annual statement of accounts and solvency with the Registrar of companies.

·         A win-win arrangement for all partners.

Why hiring a consultant for registering a start up as an LLP helps?

Filing incorporation documents and getting your start up registered as an LLP could be tedious for the lay person. Legal experts know just what to do and how to go about to make this process less time consuming. Preparing forms and documents, filing e forms with MCA, preparing LLP deed of agreement, choosing a unique name call for intense scrutiny and follow up work that only a firm well versed with the legalities can successfully see through.

Legalo services might just be what you are looking for:

ü  We cover all services from scratch that you may need to register your start up as an LLP

ü  We have an expert team that keeps itself updated with the latest laws and bye-laws.

ü  Our services can be accessed online and you can keep track on an easy-to-use dashboard.

ü  An excellent support team will help you with your queries throughout the process.


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