What is LLP (Limited Liability Companies) and Its Advantages?

Choosing LLP grants me advantages such as limited personal liability, which protects partners' personal assets, and LLPs allow flexibility to manage tax benefits. 

The Advantages of a Limited Liability Partnership (LLP) are: 
 

• Distinct legal Entity: LLP functions similarly to a company. It can have legal proceedings in its name and have legal contracts. 
• Limited Liability: Partners in an LLP enjoy limited liability, which means they are not responsible for paying the debts of the company from their personal assets. 
• Easy to build: LLP has an easy and simple process. It is not like the other complicated processes, which include heavy documentation and months of waiting. 
• Smooth  Management: All the decisions and activities management in the LLP are managed by the board or directors, and shareholders have fewer chances in the decision-making.  
• Tax benefits: LLP is exempt from different taxes, like minimum alternative tax, dividend distribution tax, and these taxes are also minimal as compared to other businesses. 
• No Restrictions on Transfers: There are no restrictions on the entry and exit of a partner in an LLP, and one partner can easily transfer their ownership to others. 

How does a Limited Liability Partnership work? 

Here are the features of a Limited Liability Partnership: 
 

• An LLP is a separate legal as similar to a company. Means it can own contracts and assets in its own name. 
• To make an LLP, you need a minimum of two individuals. However, there is no maximum range for the number of partners and LLPs. 
• To regulate a company, an LLP must have 2 designated partners, of whom one should be a resident of India. 
• The LLP is limited only to the amount an individual has contributed, protecting their personal assets from the failure of the business or business debts. 
• Starting an LLP is easier as compared to a private limited company. 
• LLPs are easier to manage as they have fewer requirements and responsibilities. 
• To start an LLP, there is no minimum contribution.