An advanced business vehicle, an LLP limits the liability, unlike the conventional Partnership firm.
Introduction
A Limited Liability Partnership is a form of business organization where the constituting partners of the firm each have limited liabilities toward the firm, thus exhibiting features of both classic partnerships and companies. In LLPs, unlike in a partnership, no partner can generally be held liable for the misconduct or negligence of another partner. Furthermore, the excessive regulatory regime of Partnerships has not been carried into LLPs. LLPs can also avail certain tax benefits and are exempt from audits below certain capital limits.
Advantages of LLPs over Partnerships
Some potential benefits of an LLP over a Partnership are –
- LLPs have a separate entity than its partners.
- LLPs offer limited liability for its partners, as opposed to the liability under conventional Partnerships.
- LLPs have no restrictions as to the maximum number of partners in the firm, while Partnerships can only have up to 50 partners.
Documents required for convert Partnership to LLPs
- Designated partner identification number (DPIN) or Director Identification Number (DIN) of all partners.
- Digital Signature Certificates for the LLP.
- LLP 1 –Addition of “LLP” to the existing firm name.
- Drafting of LLP agreement.
- LLP E- Form-17 - Application of conversion.
- Statement of the consent of Partners to conversion.
- List of all creditors along with the consent to conversion.
- Statement of assets and liabilities of the company (duly certified by a CA).
- Approval from any other body/authority as may be required.
- Approval of the governing council (in the case of professional firms).
- NOC from Income Tax authorities.
- Financial statements of the Partnership Company.
- Particulars of any court proceedings.
- Rejection letter of ROC in case of an earlier conversion application.
