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Reasons Why You Must Consider LLP For Your Start-Up

Reasons Why You Must Consider LLP For Your Start-Up : Setting up a new business is just the first step in the ladder to success where one of the most crucial deciding factors is choosing the appropriate business entity for your start-up.

Reasons Why You Must Consider LLP For Your Start-UpThe entity you decide for your business must help your business flourish and the liabilities and conditions mandated for the particular business entities must be suitable to you and your business.

Of the types of business entities, the one most favored by entrepreneurs is Limited Liability Partnership or LLP which is a relatively newer business structure that was notified in March 2009, under the Limited Liability Partnership Act, 2008.

A Limited Liability Partnership is a legal entity and a corporate body that is separate from the partners present. It is an optimum amalgamation of a Partnership as well as a coorperation or Company, wherein it offers the title of a legal entity like a Company and also offers operational as well as organisational flexibility like that seen in a Partnership. Also, for an LLP some or all the partners within the partnership have limited liabilities.

There are a number of reasons for entrepreneurs choosing an LLP for their business, some of which include the low cost of formation of an LLP, the relatively simpler LLP registration procedure which can be done online and the flexibility that it offers as compared to other business entities. These just a few of the several salient features of a Limited Liability Partnership which make it the most popular option that entrepreneurs choose as a business entity while starting their own small business or enterprise.

Reasons Why You Must Consider LLP For Your Start-Up

  • Lesser Compliances

Apart from the lower compliance costs for an LLP, the other advantage is that there are lesser compliances to adhere to, such as there is no provision to hold a meeting or to keep records of a meeting mandatorily between the partners.

  • Flexibility of Organization and Operation

LLP allows for flexibility in terms of the structure of the business, such that they can adopt an internal organization like that of a Company while at the same time limiting the liability of the partners to the extent of the capital contributions made by them individually.  The structure of LLP saves the partners from the personal responsibility for the acts or omissions of other members.

  • Perpetual Succession

Also, an LLP has the flexibility to exist on its own even when there are changes in the partners, implying that there is a perpetual succession in an LLP. This means that if there is a change in the shareholders or a change in the partners or number of partners of the LLP there will still be no change in the existence of the LLP or its legal status.

  • Choice of Agreement Clause

The partners in an LLP have the right to choose and determine the clauses of the LLP agreement that can influence duties, rights as well as the obligations of the partners, even with regards to sharing of profit and loss, or transfer of inheritance, or rights to access and inspect books, etc. as per the requirements of the partners. The choice of Agreement CLause further even gives the partners to pursue their own businesses separately elsewhere by including a clause in the Agreement.

  • Tax Benefit

Another major reason to choose an LLP is that it provides tax benefit because the profit is taxed only to the LLP as a legal entity and not to its partners separately, thus avoiding the burden of double taxation.

  • Right to Business Management

The partners of an LLP have the right to manage the business directly unlike in the case of a Private Limited COmpany where the shareholders do not have the right. This freedom and the right to manage the business allows better control over the business and authority to oversee all the activities.

  • Entitles to Property of its Own

An LLP is entitled to have a property in its own name and can enter legal contracts to as a separate legal entity. The LLP has the option to have its own registered office and address for the purpose of communication as per a provision in the Limited Liability Partnership Act, 2008.

  • Absence of Limit on Maximum Number of Partners

LLP has the privilege of choosing any number of partners as there is no limit on the maximum number of partners within the LLP, where the minimum number of partners required is 2. This absence of a limit on the maximum number of partners can help the LLP to obtain a maximum number of investors for the Company which is beneficial for the business too.

Thus, an LLP helps achieve the perfect blend of professional experience and entrepreneurship to organize and operate in a flexible, innovative and efficient way and is the perfect choice for start-ups.

CP Singh
CP Singh
I am a Graphic Designer and my company is named as CP Grafix, it is a professional, creative, graphic designing, printing and advertisement Company, it’s established since last 12 years.


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