LLP would be a handy tool for Knowledge Industries

Discussion in 'LLP' started by naina, Mar 15, 2014.

  1. naina

    naina Member

    LLP would be a handy tool for Knowledge Industries Limited liability partnership (LLP) is an alternative corporate Business vehicle that offers the twin benefits of limited liability of companies & the flexibility of partnership firms. Introduction LLPs in India is a path-braking reform which is in consonance with the changing environs of the business world. LLP is a body corporate with perpetual succession & legal entity separate from its partners. An LLP shall appoint at least two designated partners; one of them a resident of India. These designated partners are required to ensure regulatory & legal compliance. The mutual rights & duties of partners of an LLP inter se & those of the LLP & is the partners are governed by an agreement between the LLP & the partners. An LLP is under an obligation to maintain annual accounts reflecting true & fair view of its state of affairs. It is obligatory on the LLP to file an annual statement of accounts & solvency with the registrar. The accounts shall also be audited, subject to any class of LLPs being exempted from this requirement by the central Govt. A firm private company or an unlisted public company is allowed to be converted in to LLP. LLP is different from of partnership firm. In a partnership firm, partners are liable jointly with all, the other partners & also severally for all acts of the firm done while as a partner whereas in LLP, partners are not affected by misconduct of other partners. In partnership, Liability is unlimited while an LLP partner’s liability is limited to his contribution. Number of partners is limited to 20 in case of partnership firms whereas in case of LLP, there should be minimum 2 partners, but no other restriction on number of partners. LLP is also from of company in many aspects. In case of a Company internal governance structure is regulated by statute (Companies Act 1956) where in case of LLP internal governance structure regulated through agreement among Partners Management–ownership divide is in herent in a company where as there no management –ownership divide in LLP. In the finance Bill, 2009, LLPs & general partnership have been accorded the same tax treatment. Taxation of LLP income will be in the hands of the entity & the profit accruing to the partners will be exempt from income tax. But remuneration to partners will be taxed as ‘Income from Business & Profession’ in the hands of the partners. The designated partner shall sign the Income tax return of an LLP conversion from a General partnership firm to an LLP will have no tax obligations if the rights & obligations of the Partners remain the same. The ministry of corporate affairs has put in place an e-governance System to provide service envisaged in the LLP act in a record time three months making in the first, act to be Implemented in electronic mode from the very Beginning services are available through the portal iip.gov.in in E-filing is supported by the digital signature certificate (DSC) which ensures the legal validity of the documents. There is also the facility to make payments of LLP fees electronically through credit card. We hope that this new corporate form will specially benefit professionals, service sector & small & medium enterprises. It would also be a handy instrument for knowledge–and technology-based enterprises.

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