Advantages of LLP, that will help you boost your business

Published On: Apr 15, 2019Last Updated: Apr 15, 20193.1 min read

The last decade witnessed a tremendous growth of start-ups in India. Out of all the available business structures, LLP registration has been a popular choice. When it comes to flexibility, ensure it is not just limited to acing your yoga poses. You will need it to run an organization efficiently and that is where LLP comes to play, giving your partnership business a better structure and required flexibility. Let us now discuss what is a limited liability partnership & advantage of llp registration in India.

What is a limited liability partnership?

Best is to have a comprehensive knowledge of the general partnership prior to discussing the LLP. It is when two or more individuals mutually decide to come together and start a business with an aim to make a profit it is called a general partnership. It offers an informal structure and greater liability.

Click to know about the types of partnership firms in India.

LLP is a formally structured partnership with confined liability such that one or more partners cannot be held liable for the actions of the other.

We can call an LLP an ace business structure as it offers the best of both worlds. The security and limited obligation of a company and flexibility of a partnership.

It has the following perks:

• Low cost of establishment

Partners have the liberty to invest in chunks making capital generation easy and reducing the cost of incorporation.

• Limited compliance requirement

In comparison to a private limited company, LLP has a limited compliance requirement is less which reduces the burden on the partners.

For example, there is no compulsion on LLP’s to conduct meetings or keep a record of the meetings. 

• Higher credibility:

LLP is governed by the LLP agreement which gives it a formal structure increasing its credibility than that of partnerships.

• Fewer restrictions

The registration process of an LLP is simple. There is no minimum capital requirement, nor there any cap on the number of partners it can have.

• Separate legal entity

An LLP can get into contracts and own properties in its own name. Moreover, the liability is levied as per partner contribution in the firm. Learn more about separate legal entity in detail here.

• Tax benefit

The issue of double taxation is not there in an LLP. As the tax liability is on the LLP and not the partners individually.   

Types of flexibility an LLP offers:

• LLP has the liberty to add an additional business address to receive any communication/documents along with the address of the head office.

• Partners draft the LLP agreement, according to which the LLP runs. Having the liberty to add specific clauses brings clarity among the partners. The distribution of duties and responsibilities makes daily operations simple.

• Benefit of an LLP is that it allows each of the parties to carry on their own separate business. The remuneration is paid to all the partners according to the LLP agreement.

• An LLP can be created for a specific period or for a venture. After the objective is achieved it can easily be stuck off from the registry or can be winded up.

• No limit on the maximum number of partners.

• No compulsion of getting accounts audited until the turnover is more than 40 lakh rupees in any financial year. Or whose contribution does not more than 25 lakh rupees.

• Mergers with another LLP’s are possible.

• Partners have full control over running the business.

To conclude

LLP offers one to build an internal organization with a dynamic structure. It provides the security and discipline of a corporate structure with the flexibility of a partnership. If these are the qualities you were looking for, you are good to register your LLP

Any questions about LLP Registration Process

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Kahini Jhaveri
About the Author

Kahini Jhaveri

Kahini Jhaveri is an IP specialist at, with a keen interest in content creation. She holds a B.A. LLB honours from Institute of Law, Nirma University, Ahmedabad. Kahini specializes in Intellectual Properties, specifically Trademark Law.

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