In the realm world of Business Professionals, the choice of business structure which the business would be functioning with. Amidst multiple structure acting as a viable structure, LLP registration for professionals stands out to be the perfect fit, depending upon the business needs. In this blog we would be discussing in detail, benefits of registering as an LLP from business professional perspective and consideration that they would need to keep in mind as well.
Benefits for Business Professionals
Following are the benefits for business professionals if they choose LLP Business structure for their business.
- Limited Liability Protection
The structure of protecting the personal assets of the partners, where they are liable to the extent of the contribution that has been made, if what attracts a lot of business professionals, who start out a business, because rarely businesses are profitable since day one. This is one of the essential feature of registering as an LLP. This feature does not exist in a partnership business.
A private limited also has limited liability protections, so the question that arises is why not private limited mode of registration, the following points make it clear.
- Flexibility in Management
In an LLP, there is fleaxibility in management, the partners who are running and involved in day to day operation of the business also manage the business, but what happens in a private limited is it is owned by shares and the shareholders own the business, and they appoint separate management like Board of Directors & CEOs.
- No minimum requirement of capital
There is no minimum capital required to start for business professional, to register themselves as an LLP, to start as a private limited they need to have capital. Bur registering as an LLP makes investors hesitant to invest in them, if business professional seek investment from investor, immediately after incorporation then it is not recommended to select this business structure, this is the best structure if the long-term vision of the business professional to run a bootsrapped business, then this business structure is very viable.
- Pass-through Taxation Structure
An LLP has the same taxing structure as that of a business which has partnership structure of business, partners are taxed individually on the basis of the profit they make and file IT Returns on the basis of the profits that they have made, in partnership and LLP there are partners who take their cut, from the contribution they have made in the business whereas, the managing board in a private limited company draw salary and is subject to different taxing provision.
- Separate Legal Entity
An LLP is a business structure which is different from that of its partners, an LLP can own, rent and buy property, it can be held liable different from that of its partners. This business structure is not a partnership, the partners are made personally liable whereas, in an LLP they have limited liabilty, no partner is personally liable, their asset is kept safe. This business structure is also in that of private limited.
- Perpetual Succession
An LLP is run by partners, as well as in that of a partnership business structure, hence they take cuts in their business , the cuts are as per their contribution made in the business. Whereas ,in that of a private limited they are appointed as employees and are given salaries, and there maybe system of cut in private limited but there might be certain terms and condition that they would be taking cut, incentive but generalsing it there are these systems which are intact . An LLP , is not effected by the change in the partners, same in that of business structure of a partnership, not bothered by change in partners or the structure.
- Ease of compliance
It is easy to comply with that of the laws, post registration as compared to other forms of business, in that of an LLP. And the registration process is also simple and easy to comply as compared to other forms of business.
It has no taxing unless there is no profit just mere auditing as well as the IT Returns.
To know more, visit on: https://www.registerkaro.in/wordpress/llp-registration-for-professionals/
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