Are you looking for flexibility in your business structure? You can consider setting up an LLP (Limited Liability Partnership). LLP refers to the legal and flexible business structure that can continue its existence irrespective of partners leaving the business. Today, accountants and solicitors choose this option. But, this business structure can also offer benefits to other business types. The LLP structure differs from the traditional business partnerships. It is also different from the limited company structure. The country where you register the LLP may have laws to regulate the company. Do you wish to know more? Read ahead.
An LLP Structure
An LLP refers to a separate legal entity with no link to its partners or members. The members have limited liability. It means they may have accountability only for the amount of money they invest in the business. Partners also have an obligation to personal guarantees. You can add partners only for a business with a profit-making goal. To register a company as an LLP, you need the following:
- Proof of registered address for the business
- Register with information regarding the members
- A minimum of two members (individual or limited companies)
Difference Between An LLP And Other Business Structures
Traditional business structures may not have the same protection as the LLPs. So, the partners of a traditional partnership can become liable for the debts incurred by the business. Also, the clients engage with the partners individually in a traditional setting. In an LLP, clients view a partnership as an entity.
Limited companies and limited liability partnerships may seem similar. But, it differs from one another in the following ways:
- Non-profit organizations can use the structure of limited companies. Limited companies become limited by guarantee. You can choose an LLP only for business with profit as its goal.
- In limited companies, one person can set up the company. That person can fulfill the role of the director and shareholder. Once you setup LLP online, two designated members complete the legal requirements, including statutory filing. An LLP can also have an unlimited number of ordinary partners.
- Limited companies need to pay corporate tax. The members of an LLP can pay income tax after self-assessment.
- A limited company has an inflexible internal structure. An LLP has a flexible constitution that members can change.
- Members of a limited company can sell their share to secure capital investment. In an LLP, no shares exist.
Benefits Of Setting An LLP Online
Benefit #1 Limited Liability
A Limited Liability Partnership means the partners have no responsibility for the actions or misconducts of the other partner. The personal liability remains restricted to the cash investment by the person. Hence, other partners may not feel the brunt caused due to incompetence in an LLP. It means business owners have no personal responsibility for debt, obligations, and liability. Therefore, if anyone sues the business, only the assets owned by the company remain at risk. The personal assets of the partners remain safe.
Benefits #2 Reasonable Cost Of Forming An LLP
The cost of forming an LLP remains low compared to creating a public or private company. In different countries like the UK, USA, and others, you may need to pay a reasonable amount to construct an LLP. Different companies offer several packages at affordable rates to form an LLP online.
Benefit #3 Relaxed Statutory Compliances
Compared to private limited companies, the statutory compliance for LLP may seem relaxed. Few formalities to start and manage LLP means less time and effort from the partners. Also, compared to a private company, LLP has minimal government interventions. Hence, they can focus on their business instead of compliance formalities. Focusing on vital business matters translates to better productivity.
Benefit #4 Relaxation From Auditing
For eligible small LLP, there exists an exemption from having an audit. Company partners can take advantage of this and get the benefits. An LLP qualifying as a micro-entity also qualifies as a small LLP. So, partners of such companies can take advantage of the exemption available.
Benefit #5 Unlimited Registered Partners
An LLP must have at least two partners. Any number of people with a sound mind can become an LLP partner. An option to include an unlimited number of registered partners makes an LLP company attractive for investors. With more partners, it becomes easy to divide the liabilities. So, a partner of an LLP may carry only a limited burden. Also, public companies can become a partner with an LLP.
Benefit #6 Easy To Dissolve
Dissolving a Limited Liability partnership seems simple compared to Private Company Limited. A partner can declare the LLP as defunct for dissolving it or follow the country’s rules in which the partner has registered the LLP. Also, you can check for 15-Minutes Fried Chicken Breast with Asparagus
Benefit #7 No Minimum Capital Contribution For The Partner
Unlike other options, an LLP has no mandatory capital norm. A person planning to start an LLP can avoid showing proof of the invested capital. The capital contribution of the partner can include the following:
- Movable property
- Immovable property
- Tangible property
- Intangible property
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LLP has become famous in many countries. To navigate through the process, you can get the help of an expert. A professional with experience can offer end-to-end registration services to ensure you get the customized solution for your business needs. Try to connect with such experts to get reliable advice to get the best structure to meet the business vision.