There is no requirement for a minimum deposit.
There are no minimum capital requirements for LLPs. An LLP can be set up with the smallest possible capital. A partner's involvement may also consist of concrete, personal, real, or intangible assets or other benefits to the LLP.
No business owner restrictions:
An LLP requires a minimum of 2 partners, with no maximum number of partners. This is different from a private limited company, where members are limited to 200 or less.
Reduce the cost of registration:
The cost of registering an LLP is lower than the cost of registering an individual or public limited company. However, in recent years, the gap between registration fees for LLPs and private limited companies has been narrowing.
For example, LLPs can register for Rs 7899 through India Filing. Companies can also register through India Filings for Rs 7899.
No legal audit requirements:
All companies, whether private or public, are required to audit their accounts, regardless of authorized capital. However, there are no such mandatory requirements for LLPs. This is recognized as a significant compliance benefit. A limited liability partnership is compulsory for a tax audit when
The LLP's contribution exceeds Rs. 250,000 or the annual turnover of the LLP exceeds 100,000,000,000,000 rubles. 400,000
LLP Tax Considerations:
For income tax purposes, LLPs are treated on par with partner companies. Therefore, LLPs are responsible for paying income tax, and the shares of LLP participants are not subject to tax. Therefore, there is no tax on dividends. The provisions of "Conditional Dividends" under the Income Tax Act do not apply to LLPs. Section 40(b): Payment of interest, wages, bonuses, commissions or remuneration to partners is permitted as a deduction.
Dividend tax on dividends (ITD) distribution does not apply.
In the case of a company, if the owner takes out profits from the company, the company pays an extra tax in the form of DDT at the rate of 15% (surcharge and tuition). However, in the case of an LLP, no such tax is levied and the profits of the LLP can be easily taken by the partners.
LLP disadvantages:
LLPs have a number of disadvantages compared to private limited companies, including:
Penalties for non-compliance
Even if the LLP is not doing business, it must file an annual income tax return and an MCA annual return. A penalty of Rs 100 per day per form applies if the LLP does not file Form 8 or Form 11 (LLP annual submission). There is no maximum fine and it can reach hundreds of thousands of dollars if the LLP has not filed an annual report for several years.
Annual reports are not required for individuals or partnerships. Therefore, only the fine for negligence according to the Income Tax Act is applied.
Equity investment is not possible:
There is no concept of equity or equity like a company in an LLP. Therefore, business angels, HNIs, venture capital funds, and private equity funds cannot invest as shareholders in LLPs. Therefore, most LLPs have to rely on promoters and debt financing.
A Higher Income Tax Rate:
The income tax rate for companies with a turnover of less than 25 billion rupees is 25%. (Additional reductions for new manufacturing firms in 2019).However, LLPs are taxed at a rate of 30% regardless of sales.
If you need any help regarding LIMITED LIABILITY PARTERSHIP feel free to contact us on Our Toll Free number 1800-3070-2070, Our Business advisor will explain you in details.
Tags
What is the Advantages and disadvantages of LLP, Disadvantages of LLP, Advantages and disadvantages of LLP, What is LLP Registration, Advantages of LLP registration, What is LLP partnership, Advantages and disadvantages of LLP Partnership.
