What are the Advantages of an LLP?
- An LLP is easy to form and the cost of formation in comparison to a company form of organization is cheaper
- LLP provide flexibility without imposing extreme legal and procedural requirements.
- It enjoys the status of a separate legal entity safeguarding the assets of the partners in times of loss. The liability of repayment of debts and lawsuits lies on the shoulders of the LLP and not the partners.
- The LLP can sue and be sued on its own name. The partners cannot be sued for the dues of the LLP.
- LLP has perpetual succession, which means the death, insolvency or lunacy of any or all the partners would not affect the existence of the LLP. It is formed under law and can be wound up only in accordance with the provisions of law.
- In the similar manner, the LLP can own and dispose property and assets on its name. The assets of the LLP, however, are not the assets of the partners and they cannot claim any right on the assets of an LLP.
- Partners have freedom and flexibility in operating an LLP. The LLP Act does not provide too many rules and restrictions and provides liberty to the partners to manage the affairs in the way they wish to.
- It is easy to raise money for an LLP as it enjoys the status of a regulated legal entity.
- There is not mandatory requirement for an LLP to conduct an audit. An LLP has to get its accounts audited annually by a practicing chartered accountant only when the turnover and contribution cross Rs. 40 lakhs and Rs. 25 lakhs respectively.
- There is very little compliance procedure that has to be followed by an LLP in comparison to a corporation making it easy and less cumbersome to operate.