Limited Liability Partnerships (LLPs) is a combined feature of partnership and company form of business. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
Unlike in partnership, no partner is liable on account of the independent or un-authorized actions of other partners and accordingly individual partners are protected from joint liability created by another partner’s wrongful actions or misconduct.
Benefits of Limited Liability Partnerships (LLPs);
- LLP combines the advantages of ease of running a Partnership and separate legal entity status and limited liability aspect of a Company.
- It is based on agreement between partners.
- Flexibility without imposing detailed legal and procedural requirements.
- It can continue its existence irrespective of changes in partners.
Taxation aspect of Limited Liability Partnership;
- Tax will be payable by the LLP at 30% plus Education Cess. No surcharge will be payable by the LLP as per AY 2013-14.
- No Minimum Alternate Tax & Dividend Distribution Tax.
- ITR – 5 is applicable to LLP.