Advantages of change In LLP Agreement




Advantages of change In LLP Agreement (Limited Liability Partnerships) have the following advantages:

Easy to use

Like entrepreneurs, it is easy to start and manage a business. LLPs are customized to meet the needs of their partners. As compared to any other Private Limited Company, there are fewer formalities when it comes to legal compilation, annual meetings, and resolutions. Read the article Choosing between LLPs and Private Limiteds for a detailed comparison.

A minimum amount of capital is not required

In order to start an LLP, you only need the minimum amount of capital money. It can be a tangible, movable asset such as land, machinery, or an intangible asset. Private companies have a capital requirement of Rs. 1,00,000 and Public Companies have a capital requirement of Rs. 5,00,000 respectively, but LLPs do not have such mandatory capital requirements.

Business owners are not limited

The number of partners can vary from 2 to many. An LLP requires a minimum of two partners and there are no limits to the number of partners. This differs from a private company wherein there is a restriction not to exceed 200 members.

 The cost of registration is lower

It is cost-effective to register a LLP as opposed to a private company (public or private). Read a comparison of the costs for LLP, OPC, private limited, partnership, and proprietorship.

 Compulsory audits are not required

An LLP is not required to audit their accounts. A company (public or private) is required to have its accounts audited by an auditing firm. An LLP is required to audit their accounts in the following situations:

1.In the event that the contributions of the LLP exceed Rs. 25 lakhs, 2.When the annual turnover of the LLP exceeds Rs. 40 lakhs

Savings due to a lower compliance burden

It is easier for LLPs to comply with the regulations since they only have to submit two statements, the Annual Return and the Statement of Accounts. Unlike a private company, which requires at least 8 to 10 regulatory formalities and compliances to be completed, a private company requires at least 8 to 10 regulatory formalities. See the Annual Cost Comparison of Private Limited and LLP.

An overview of the taxation aspects of LLPs

As a result, the LLP does not have to pay dividend distribution tax as per section 40(b). Bonus, commission, interest to partners, or salary payments are not subject to tax. Under income tax law, the provision of a deemed dividend does not apply to LLPs.

 It is not applicable to (DDT)

As a result, LLP partners do not have to pay additional taxes in the form of DDT if they withdraw profits from the company. On the other hand, as a company owner, you need to pay DDT at 15% (surcharge and educational cess). As a result, LLP profits can be easily withdrawn by the partners.

After reading about the advantages of LLPs, vakilsearch can assist you with changes in LLP agreements if you decide to register one








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