Frequently Asked Questions

• What is the difference between LLP and Private Limited Company?

  LLP offers pass-through taxation and simplified compliance while companies face double taxation and extensive regulatory requirements. LLP partners have limited liability like company directors, but LLP doesn't require board meetings, mandatory audit (in most cases), or minimum capital requirements. However, companies can raise equity funding and list on stock exchanges, which LLPs cannot.

• How many partners are required to start an LLP?

  Minimum 2 partners are required to form an LLP, with at least 2 designated partners. There's no maximum limit on number of partners. At least one designated partner must be Indian resident. Corporate entities can also be partners in LLP, providing flexibility in partnership structure and ownership arrangements.

• What are the compliance requirements for LLP?

  LLP compliance is minimal compared to companies. Annual filing of Form 8 and Form 11 with MCA, income tax returns, and GST returns (if applicable) are primary requirements. Audit is mandatory only if contribution exceeds ₹25 lakhs or turnover exceeds ₹40 lakhs. No requirement for board meetings, AGMs, or director appointments.

• Can foreign nationals become partners in Indian LLP?

  Yes, foreign nationals can be partners in Indian LLP subject to FDI regulations and sectoral caps. However, at least one designated partner must be Indian resident. Foreign partners need to comply with FEMA regulations and may require government approvals in certain sectors. FDI in LLP is generally permitted under automatic route.

• What is the tax treatment for LLP and its partners?

  LLP enjoys pass-through taxation - the LLP itself doesn't pay income tax. Partners pay tax on their profit share at individual tax rates. LLP pays tax only on salary paid to partners (if any). This avoids double taxation faced by companies. However, partners cannot claim depreciation on LLP assets in their individual returns.

• Can an existing partnership firm convert to LLP?

  Yes, existing partnership firms can convert to LLP without tax implications under Section 56 of Income Tax Act. The conversion process involves filing Form 17 with MCA and completing necessary documentation. Assets and liabilities transfer to LLP without attracting capital gains tax, making it an attractive option for existing partnerships.

• What happens if LLP fails to file annual returns?

  Non-filing attracts penalties and can lead to LLP striking off. Late filing of Form 8 and Form 11 attracts penalties of ₹100 per day. Continued non-compliance may result in LLP being struck off from MCA records. Struck-off LLPs lose legal status and face difficulties in banking, contracts, and property dealings.

• Can LLP raise funds from investors or banks?

  LLP can raise debt funding from banks and financial institutions but cannot issue equity shares or raise funds from public. Partners can bring additional capital or admit new partners for fundraising. Banks readily provide business loans to LLPs based on business projections and partner credentials. Private equity and venture capital investments are generally not available for LLPs.

• What are the advantages of LLP over traditional partnership?

  LLP provides limited liability protection unlike traditional partnerships where partners have unlimited liability. LLP has perpetual succession, separate legal entity status, and better credibility with clients and banks. Partners are not liable for other partners' acts unless they have knowledge and consent, providing significant protection from individual partner actions.

• How long does LLP registration take and what are the costs?

  LLP registration typically takes 7-10 working days with proper documentation. Government fees are approximately ₹2,000-3,000 depending on capital contribution. Our professional charges start from ₹4,999 including name reservation, incorporation, PAN/TAN application, and basic compliance setup. Additional charges apply for GST registration, bank account assistance, and premium services.