devesh02's blog
Introduction
An individual or a company which is registered under GST and has their GSTIN is required to file an annual return every year. The annual GST return filingby any registered taxpayer is done through forms GSTR 9, GSTR 9A, and GSTR 9C. GSTR 9 is an annual return that consists of details regarding the outward and inward supplies made or received during the said financial year under different tax heads i.e. CGST, SGST & IGST. On the hand, a taxpayer file GST returns9C every year if their total revenue during the financial year exceeds five cores.
Even though both GSTR 9 and GSTR 9 are filed for the same purpose, there are a few differences between these forms. The main difference is GSTR 9 is filed by the normal taxpayer but GSTR 9C is filed by the taxpayer whose aggregate annual turnover is more than Rs.5 Cr. In this blog, we will talk all about the difference between GSTR 9 and GSTR 9C.
What is GSTR 9?
The GSTR 9 form is filed to submit the annual return of the company by all the registered taxpayers. It includes all the information about the outgoing and incoming supplies made during the particular financial year. The taxpayer is required to submit all GSTR-1, GSTR-3B, or GSTR 4 returns before filing GSTR 9. The GST registration holder will not be permitted to file an annual GST returnif there are outstanding debts.
What is GSTR 9C?
Every registered taxpayer with an aggregate annual turnover of more than Rs. 5 Cr during a financial year is required to file GST return9C. It is a reconciliation statement which is necessary to be certified by CA/ CMA.
Key difference between the GSTR 9 and GSTR 9C
The GSTR 9 (annual return) and GSTR 9 C (a reconciliation statement) have a few differences between them which are shown below:
The GSTR 9C (reconciliation statement) is dependent on the filing of GSTR 9 (annual return as there are certain fields that auto-filed from the GSTR 9 form. So the file GST return9 should be filed very carefully. The taxpayers should keep in mind these common difference that GSTR 9C needs to certify by a CA/ CMA and GSTR 9 is to be self-certified by the taxpayers.
Introduction
The Annual General Meeting must be conducted within 6 months from the closure of the financial year i.e., 30th March every year. Once the AGM is concluded, the Private Limited Company compliancesmust file annual returns, financial statements, DIN eKyc and any other compliance with the Registrar of the Company.
What is a Private Limited Company?
A Private Limited Company is a separate legal entity from its directors or shareholders. For it to remain operational, it needs to be kept in check by submitting regular paperwork to the Ministry of Corporate Affairs (MCA)
Annual Compliance for Private Limited Company
1. Conduct an Annual general meeting (AGM)
Companies should hold their AGM within six months from the closure of the financial year. The AGM should be conducted with the purpose of preparing financial statements, annual returns, director's reports, etc.
2. Appoint an auditor
All companies are to appoint a statutory auditor within 15 days from the date of AGM and submit the ADT-1 Form with the auditor's information. The fine for delay of filing this form depends on the days of delay like if up to 30 days the then fine is 2 times of normal fees or for more than 30 days and for less than 60 days the then fine is 4 times of normal fees and so on.
3. File the financial statement of the Private Limited Company
For submitting the company's financial statements, the AOC- 4 Form must be filed within 30 days of the date of AGM. Failure to file it will result in a penalty of Rs.100 per day. This form is an annual compliance for a Private Limited Company.
4. File the annual returns of the Private Limited Company
For submitting the company's annual returns, the MGT-7 Form must be filed within 60 days of the date of AGM. Failure to file it will result in a penalty of Rs.100 per day. This form is an annual compliance for a Private Limited Company.
5. File the DIN eKYC
It must be filed for every director of the company. The Director must include a separate mobile number and a personal email address in DIR-3 eKYC. Failure to submit DIN eKYC will lead to a fine of Rs.5000. It is mandatory compliance for a Private Limited Company.
6. Prepare the Director's report
It is a financial document that was filed by very a Private Limited Company in India. All the information required by Section 134 will be included in the preparation of the Director's report. The purpose of a directors' report is to provide the shareholders with the company's affairs, including those of its subsidiaries, and the type and extent of the company's activity.
7. File Income tax return for the Private Limited Company
According to the Income Tax Act of 1960, all companies are required to file ITR-6. It must be filed on or before 30th October (for the year 2022). It should be noted that the ITR-6 deadline is constantly shifting and is announced by the authorities each year.
Conclusion
In the absence of professional guidance, Private Limited Companies frequently experience compliance stress and must incur penalties. Therefore, you must comply with the filing of the annual compliance for Private Limited Companyas per the due date announcement by the authorities because it will help you build goodwill for your company.
Introduction
The PEO and EOR both are different terms with a different meanings. A professional employer organization (PEO) is a co-employment human resources outsourcing structure that handles employee-related obligations and liabilities. On the other hand, employer of records (EOR) can help your business to grow globally. If you’re thinking of starting a business either in India or abroad. These services can benefit you in many ways, such as they will hire the best employees, manage all the functions of human resources, manage contracts, etc. In this blog, we will examine the employer of records and the benefits of focusing on EOR and PEO services in India.
What is EOR (Employer of records)?
A third-party organization known as an EOR (Employer of Records) manages all functions of human resources, from hiring to firing. The main distinction between a Professional Employer Organization and an employer of records is that the former asks for the establishment of a legal entity within the operating nation. However, if you use an EOR, you can employ people from anywhere in the world without forming a company.
What is PEO (Professional employer organization)?
A PEO is a company that handles employee-related obligations and liabilities on your behalf as a co-employer. This indicates that you can outsource PEO human resource activities such as payroll, employee benefits, compensation, taxes, and compliance with PEO services in India. PEOs give better and more low-cost benefits to your employees, resulting in a win-win situation for you, your employees, and the PEO. Moreover, they make sure that you are aware of and comply with Indian labour rules to prevent fines.
Benefits of using EOR and PEO services in India
Let us see some benefits of using Employer of Records and Professional Employer Organization services in India:
A. Overcome Regulatory and Legal Challenges: Your payroll structure, provident fund contributions, professional tax deductions, and other necessary deductions can all be handled by a PEOor EOR business.
They can more effectively handle a foreign entity's financial and compliance needs, decreasing the risk of fines and penalties. Moreover, they help to improve the position of your business in the industry by attracting top talent and clients.
B. Hire skilled workers as soon as possible: This is yet another big advantage of collaborating with an EOR supplier. You can hire the appropriate individuals for your company without establishing a legal corporation.
Moreover, before making a significant investment, you can test the Indian market. It can also be helpful if you are forming a legal entity, which can take longer, but does not want to wait that long to hire people and start the work.
C. Manage the contracts of severance and termination: Severance and termination are challenging concepts to understand. Unfortunately, a lot of employers forget that they can cash out their income and unused holiday time. Even if the sum is small, it can lead to litigation. However, yourPEO/EOR provider can manage the whole procedure for you. Legal problems are no longer a possibility.
D. Save your time and money: The initial expense of starting your subsidiary may appear minimal and manageable, but it can quickly add up. For instance, expenses for banking, office space, expert maintenance services, and other services continue to be spent.
You will also be required to pay significant legal and compliance expenses to ensure that you comply with government requirements. The service providers of PEO services in Indiamanage all of your company's tax and HR issues in exchange for a fee that is mutually agreed upon.
What benefits can EOR and PEO provide to your business?
Find the best employees in India and recruit them for your business.
Make sure their knowledge complies with Indian laws and rules.
Manages the salaries and benefits of the employees.
Ensure that your employees receive appropriate installments.
Manage the human resource requirements of your employees.
Conclusion
PEO and EOR service providers are the ideal choices for growing your business in India or recruiting Indians. They make sure you comply with local labor laws, minimizing the chance of legal problems. PEOand EOR also assist you in saving money on overhead and employee management expenses. Now all you need to do is assign jobs to the workers.
GST Return Filing With Ebizfiling
Introduction
In India, the entire process of filing a GST return is done online. GST return filing is a quick and simple process. However, to ensure that the GST credit can move on to the next phase, returns must be filed accurately and without making any errors. To get started, all you need is to log in to the GST website with login credentials. Once your GST registration has been completed, filing your GST returnis mandatory. Non-filing of GST returns may lead to severe penalties. You need not worry about filing GST returns, the experts at Ebizfiling will help you file GST returnwithin the prescribed time for each return and will help you avoid the serve penalties.
The basic scheme of GST Return Filing in India
There are three major GST return a company has to file which are:
1.One is the annual return i.e., GSTR 9, small taxpayers are excluded from it.
2.Other is GSTR 1 and GSTR 3B. We can submit them either monthly or quarterly. Large taxpayers will only be required to file monthly returns. The option of submitting quarterly is only available to small taxpayers. A taxpayer with a turnover of less than Rs.5 crores is considered a small taxpayer for this reason. A statement of turnover and various outward supplies made during the period is enclosed in GSTR 1. On the other hand, GSTR 3B is a consolidated return. It gathers information about sales and ITC. This return also includes a calculation for the total tax due.
Types of GST return
A.GSTR 1 is the record of all sales. Under this form, the suppliers will have to report their outward supplies during the reporting month. According to the norm, all the registered taxable persons are required to file the same by the 10th of the following month or quarter.
B.GSTR-3B is a monthly self-declaration, which should be filed by every registered person under GST. It is a simplified summary return of inward and outward supplies Due date of filing GSTR 3B is the 20th of the subsequent month. GSTR 3B once filed cannot be revised.
C.GSTR-4 is a Return that has to be filed by a Composition Dealer. Unlike a normal taxpayer who needs to furnish 3 monthly returns, a dealer opting for the composition scheme is required to furnish 1 return which is GSTR-4 on or before the 18th of the aftertaste to each quarter.
D.All taxpayers registered under GST are required to file their annual return in a particular form. That form is called GSTR 9. The due date for filing GSTR 9 is 31st December every year. It is a consolidation of all the monthly/quarterly returns filed in that year.
E.Return GSTR 9A is an annual return to be filed by dealers who have opted for composition scheme. It includes all the information furnished in the quarterly returns filed by the composition taxpayers during that financial year. It is to be filed on or before 31st December every year.
F.GSTR 9C is a statement of reconciliation between the Annual returns filed in GSTR 9 for a financial year and the figures as per the audited annual financial Statements of the taxpayer. The GSTR-9C must be filed on or before 31st December of the subsequent year.
Process of filing GST return at Ebizfiling
Our experts at Ebizfiling will file your GST return with some simple steps which are as follows:
A Compliance Manager will get in touch with you to remind you about your due date of GST return filingand obtain your documents along with a simple checklist.
You need to fill up that checklist and submit it along with your documents for processing.
Our expert team will verify the documents and proceed with return preparation.
All throughout the process, your dedicated Compliance Manager will keep you updated on the progress of the filing of the GST Return.
We will get your return reviewed from you before filing. Once you approve it, we will file your GST returns online.
Upon successful filing, we will send a confirmation email along with the acknowledgment receipt to your registered email ID.
EbizFiling is an eminent business platform and a progressive concept, which helps end-to-end incorporation, compliance, advisory, and management consultancy services to clients in India and abroad.Filing GST Returns onlineis easy, seamless, cheapest, and quickest with EbizFiling.com! Apart from online return filing under GST services, Ebizfiling.com also helps you to file Income Tax Returns, TDS Returns, PF Returns, and ESI Returns easily.
Key changes introduced in LLP (Amendments) Rules, 2022
A. New web-based forms for the formation of LLP
The LLP Amendments, 2022 have made all the LLP forms as web-based forms.
Now, the LLP incorporation process should only be completed through web-based forms, just like the SPICe Plus Forms are for the incorporation of companies.
The most significant modification brought by this amendment is that now every LLP is required to include Latitude and Longitude in the Address Block.
The Digi Locker Database can be used to retrieve the Directors' information.
B. Need not to apply for PAN and TAN separate from the incorporation application
The notification specifies that the Registrar shall issue the Certificate of Incorporation of an LLP in Form 16
The Registrar must include the PAN (Permanent Account Number) and TAN (Tax Deduction Account Number) given by the Income Tax Department in the said Form 16.
This means that, as is the case with companies, the incorporation of limited liability partnerships will now include the PAN and TAN applications, therefore LLPs need not apply for them separately.
As a result, the LLPs will receive their PAN and TAN together with the official Certificate of Incorporation.
C. There should be 5 Designated Partners instead of 2 without DIN
The significant change brought by the Limited Liability Partnership (Second Amendment) Rules, 2022 is that now the application for the allocation of DPIN shall be made by a maximum of 5 individuals in the Form FiLLiP. This means that at the time of incorporation, there can now be five Designated Partners (without having a DIN) instead of just two.
This is a massive step towards enabling the appointment of more than two Designated Partners (without DPIN/ DIN), with a maximum of five Designated Partners at the time of incorporation.
D. Statement of Solvency and Certificate of Truthfulness by LLP
The Statement of Account and Solvency must now be signed on behalf of the LLP by an interim resolution professional, resolution professional, liquidator, or LLP partnership administrator under the Limited Liability Partnership (Second Amendment) Rules, 2022.
Previously, the DPs who were in charge of the compliances were required to sign the Statement of Solvency.
The revised rules also include the obligation of filing a Certificate of Truthfulness and Correctness of Annual Returns of LLPs with Partner's Contribution of up to INR 50 Lakhs or sales of up to INR 5 Crore.
Form 8 (Statement of Solvency and Annual Return) will now include specific reporting for contingent liabilities.
Introduction
Since a Limited Liability Partnership is a separate legal entity, it is the duty of the designated partners to preserve and maintain proper books of accounts and submit an annual return to the Ministry of Corporate Affairs (MCA). There is 3 mandatory annual compliance for an LLPthat is Form 8, Form 11, and ITR-4. In this blog, we will mainly focus on the process to file a statement of account and solvency i.e. Form 8. This form is required to file within 30 days of the end of the six-month period after the end of the financial year.
What is Form 8 of an LLP?
The form is known as Statement of Account and Solvency. Form 8 is one of the mandatory compliance for LLPwhich should be filed annually. The LLP must disclose information about financial transactions carried out during that financial year as well as its financial position at the closure of the financial year in Form 8. The LLP must also declare its financial position by stating the following:
The annual turnover is either Rs. 40 lakhs or less.
The LLP has to submit a statement indicating the addition, modification, or satisfaction of debts up to the current financial year.
The partners or authorized representatives have complied with their responsibilities to maintain accurate accounting records and prepare financial statements.
The process to file Form 8 of an LLP
First, visit the MCA portal.
On the right corner of the website, click on "Sign in/ Sign up". Then add the required credentials and click on "Login for V3 filing".
After login goes to the MCA service and clicks on the "LLP e-filing".
The list of the e-form that are filed by LLP will appear on your screen, click on Form 8. A web-based Form 8 will appear on the screen.
On the right corner of the Form 8 option of language "English/Hindi", click on the language which suits you.
Write the LLPIN (LLP identification number)/ FLLPIN (Foreign LLP identification number) of the proposed LLP. The details such as an address, name of the LLP, jurisdiction, etc. will be filled automatically as per the details provided by you during the incorporation of the LLP.
Next fill in the all details of Part A: Statement of accounts and solvency.
Scroll down and fill the Part B: Information of statement of assets and liability. Fill in the details of the previous financial year. This information can be taken from the balance sheet prepared during the Board Meeting.
Then fill in the details of income and expenditures from the profit and loss statement prepared during the Board Meeting.
Attach the DSC (Digital Signature Certificate) of the designated partners (DPs) of LLP. Also, attach the DSC of the CS professional for authentication.
After completing the form, login to MCA again and upload the Form 8 of Statement of Accounts and Solvency.
After the form has been successfully uploaded, a popup asking for payment will appear. Pick a payment method. Following a successful payment, a message will appear, and a challan will be generated. Keep a copy for your record. The SRN number will also be on the challan.
Due Date of Form 8
The Form 8 is filed by an LLP every year and it should be filed after the closure of the financial year. The Form 8 should be filed on 30th October every year.
Introduction
Many individuals desire to become their own boss and gain freedom by starting their own businesses but it requires a lot of effort to do so. Limited Liability Partnerships are the right choice as it provides the features of the company structure and partnership firm. Incorporating your business as LLPis a very simple process as it consists of 5 steps. Keep reading this blog and you will get to know the process of incorporating a new LLP.
What is a Limited Liability Partnership?
A Limited Liability Partnership is a combination of a company structure as well as a partnership firm. LLP also limits the liability of partners to the capital amount contributed by them and that is governed by LLP Agreement. The incorporation, compliance and other regulation are governed by the Companies Act, 2013 and LLP agreement created at the time of LLP registration as per the Limited LiabilityAct, 2008.
Requirement for incorporation of LLP
There should be a minimum of two designated partners and one of them should be residing in India.
Each selected partner is required to have a DPIN and a digital signature certificate (DSC).
LLP should have a registered office where all notices and communications are made and forwarded.
The name of the LLP must contain words either s "Limited Liability Partnership" or the abbreviation LLP at the end of it.
Registration of an LLP
Let us learn the various steps involved in registering an LLP.
1. Obtain DSC -The first step is to obtain a digital signature certificate (DSC) if you do not have one. This DSC is required at further steps during the process of LLP registration. Therefore, you must prepare it before applying for registration. You will also need to enter your DSC for each document because almost all of these documents are available online when it comes to registering an LLP. The DSC can be received from any of the authorized institutions that have the authority to distribute them.
2. LLP name reservation-According to the revised procedure, applicants have to submit a web form named RUNN-LLP (Reserve Unique Name – Limited Liability Partnership) for name reservation. The outdated LLP Form 1 has been replaced with RUN-LLP. The new form has shortened the requirement to the preferred name, its importance, and other essential characteristics.
The applicant can submit a maximum of two names in preference order with their significance. The names should comply with the relevant provisions for name reservation. In case the names are rejected by MCA, another chance is provided to the applicant for applying 2 more names for the proposed LLP. If one of the names is approved, then it should be allotted by the Registrar to the proposed Limited Liability Partnershipfor a period of 90 days. It should be noted that having an account on MCA portal is mandatory.
3. Prepare documents for incorporation of LLP-Once the name is approved, the proposed LLP is required to prepare certain documents which are as follows:
Proof of office address (Conveyance/Lease Deed/Rent Agreement etc. along with rent receipts)
NOC from owner of the property
Copy of utility bills (not older than 2 months)
Subscription sheet including consent
In case, a designated partner does not have a DIN, it is mandatory to attach: Proof of identity and the residential address of the subscribers
All the DPs should have a digital signature certificate
Detail of LLP(s) and/or Company(s) in which partner or designated partner is a director/partner
Copy of approval in case the proposed name contains any word(s) or expression(s) which requires approval from the Central Government.
4. Application for LLP incorporation- This step and application represent the major change in the new procedure. The LLP Form 2 is replaced by FiLLiP (Form for Incorporation of Limited Liability Partnership) for filing the incorporation application. The applicant should fill in all the information required in FiLLiP along with the necessary documents. The most important part of this application is the integration of the DIN allotment application with it.
A maximum of two Designated Partners (DPs) can apply for DPIN/DIN under the application. If there are more than two DPs, they can be added later by making the appropriate filings. This form can also be used for name reservations. The applicants have the option of reserving the name of the proposed LLP partnershipvia FiLLiP or LLP-RUN.
The Central Registration Centre (CRC) will review the application before approving it. If the registrar thinks it is necessary to request for more documents or information, he may do so by directing a re-submission within 15 days. After the re-submission of the application, the CRC has to convey the decision within 15 days. It is specified that the total number of days for document re-submission cannot exceed 20 days.
Following approval of the online application for LLP registration, the Certificate of Incorporation (CoI) will be issued and the DPIN/DIN will be allotted to Designated Partners.
5. Draft and file LLP agreement- Draft the LLP agreement keeping in mind the requirements of the partners. The LLP agreement covers the mutual rights and duties amongst the partners and also between the Limited Liability Partnershipand its partners. The LLP agreement must be printed on the Stamp Paper and the value of the stamp vary from state to state. The agreement should be duly signed by Designated Partner, duly notarized, and also signed by with witnesses
Every LLP must file information regarding the LLP agreement executed in Form 3 with the Registrar within 30 days of incorporation or at the time of filing Form FiLLiP with the prescribed fee.
Introduction
In a Private Limited Company, the shareholders help decide the company’s ownership. During your business, if you want a new investor or change the ownership of the proposed Company you must transfer the shares. Today, we'll study the process for transferring shares in a Private Limited Company in India. This blog will also focus on all the information on share transfers, the share transfer process, and other share transfer-related details.
What is a share transfer?
The voluntary transfer of a share's title from one party to another is referred to as a share transfer. Shares of a company are often freely transferable, while the articles of incorporation may include restrictions on the transfer of Private Limited Company shares.
The steps of share transfer of a Private Limited Company
The first steps in the process of transferring shares from the current shareholder to the new shareholder are as follows:
The company receives notice from the transferor.
A board resolution is passed by the Board of Directors reviewing the transferor's notice to the company.
The company delivered an offer letter to the existing shareholders.
The current shareholders have to submit a letter of objection, if any.
Stamp duty is reimbursed along with the SH-4 share transfer agreement.
Certificate must be shared.
The board of directors decided to record the share transfer.
Steps involved in initiating the share transfer procedure
The articles of association of the Private Limited Company will be scrutinized and if there are any restrictions then it must be revoked.
It is necessary to inform the director of the company in writing if you want to transfer a share of the company.
Set the price according to the articles of incorporation of the business, which specify that the company's shares are first sold to its existing shareholders.
The company must inform the other shareholders that shares are now available, along with the price and deadline for purchasing them.
The process to transfer shares of a Private Limited Company
Get a share transfer deed that complies with rules and guidelines.
Get the sign of both the transfer or and transferred and complete the transfer deed.
The transfer share deed should be stamped in accordance with the Indian Stamp Act and the State’s Stamp Duty Notification. For every 100 Rupee share value or a part of it, the official share transfer rate is 25 Paise.
The share transfer deed should also be signed by a person acting as a witness. Such a person should sign the deed under his or her name, address, and signature.
Deliver the transfer deed to the company along with the share certificate or allotment letter.
The company must review the documents and, if authorized then issue a new share certificate in the transferee’s name.
Conclusion
The share transfer process will not be completed unless the company registers the transfer. Following registration, the company has only one month to send the transferee the share certificate. While shareholders in a Public Limited Company can easily and freely transfer their shares, the transferability of shares in a Private Limited Company is completed by following the guideline specified in the Articles of Association (AOA).
Introduction
If you have incorporated your business structure as a Limited Liability Partnership structure in India. Then you should be aware of certain annual compliance for LLPwhich is necessary to be filed every year. The annual compliance is ITR, DIR 3 KYC, Form 8 and Form 11 which should be filed after the end of the financial year. This blog we will focus on 2 mandatory annual compliance filed by an LLP that are Form 8 which is regarding statement of account and solvency and Form 11 which is regarding annual returns.
What is Form 8 of LLP?
Form 8 is submitted to ROC each year for filing the solvency and statement of accounts of LLP. This Form includes a declaration on the LLP's solvency by the authorized partners, as well as information of the LLP's assets and liabilities and revenue and expenditure statements. This compliance for LLPshould be filed annually.
What is Form 11 of LLP?
Form 11 is submitted to the ROC each year for filing the annual return of an LLP. This form includes information about the number of Partners, Designated Partners, and Body Corporate as Partners, amount of obligation for contributions, actual contributions received from Partners, Designated Partners, and a summary of Partners and Designated Partners as of 31st March. This compliance for LLPshould be filed annually.
Requirements and attachment of Forms
Form 8
Listed below are the requirements to file Form 8 and attachments with the form:
Both designated partners should provide digital signatures.
It is necessary to obtain certification by the auditor of the LLP if the annual total of firm exceeds Rs. 40 lakhs or the contribution of each partner reaches Rs. 25 lakh.
LLP should attach certain documents such as a copy of the balance sheet of LLP, profit and loss statement, MSME 2006 disclosure, and statement of contingent liabilities not anticipated, if any.
Form 11
Listed below are the requirements to file Form 11 and attachments with the form:
Both designated partners should provide digital signatures.
It is necessary to obtain certification from a practicing company secretary if the total contribution of the LLP partners exceeds Rs. 50 Lakhs or the turnover of the LLP exceeds Rs. 5 Crore.
In Form 11 the list of companies or limited liability partnerships where partners or designated partners have acted as directors or partners should be attached.
Due Date of Forms
Both Forms are filed by an LLP every year and they should be filed after the closure of the financial year. The Form 8 should be filed on 30th October every year. The Form 11 should be filed on 30th May every year.
Fines for non-filing of Forms
If you fail to file the Form 8 and Form 11 within the set deadline, then the penalty for non-filing is Rs.100 per day for this LLP annual compliance.
Introduction
LLP stands for Limited Liability Partnership firm. It is an alternative business form that offers limited liabilityprotection like all other business structures and the flexibility of a partnership. There is no impact on this type of business, when there is any change in the partners arrangement in the firm. This dynamic structure is rapidly becoming a common form of business formation for many individuals. Even in nations like the United States, the United Kingdom, Australia, and Germany, this business strategy is widely considered.
A key advantage of an LLP is that it shields an individual partner from joint liability and errors made by other partners in a partnership firm. While there are various company structures to select from, the Limited Liability Partnership(LLP)structure is a popular choice nowadays among the entrepreneurs. It is important to look into the benefits of selecting an LLP as your business structure. Keep reading this blog, we will talk about- "Why should you choose to form an LLP as your business structure?"
Why Choose The LLP Structure For Your Business?
There are several benefits of selecting an LLP as your business structure. Let us explore them in detail:
1. Easy Formation with low investment: A Limited Liability Partnership (LLP) enables partners to work together even if they have limited resources because there is no minimum capital requirement for establishment. Moreover, capital contributions can be contributed in any form including intangible assets, machinery, and land.
2. LLP can have an unlimited number of members: LLPs can have any number of partners but there is a minimum of 2 partners are required. The total number of partners that an LLP can have is unlimited.
3. Separate legal entity: The members of the LLP are not responsible for any liability incurred by LLP, whether it be debt payments or lawsuits because the LLP partnershipstructure is a separate legal entity from their partners or owners.
4. The ability to sue: An LLP, being a separate legal entity, can sue in its own name and can be sued by parties.
5. Flexibility in Management: The LLP agreement gives owners the freedom to choose how they want their company to run and expand. A managing partner or a committee leader can be appointed by the LLP partners to oversee day-to-day operations. In an LLP, management is completely flexible since partners can distribute tasks and responsibilities according to their expertise and skills.
6. Low Registration Fees: Compared to other business structures (like Public Limited Company or Private Limited Company), an LLP has a low registration cost. The registration procedure is pretty simple, and the average time required to complete the registration process is between 15 and 20 days.
7. Audits are optional: As audits are not optional, limited liability partnership firms have certain compliance perks over other business structures. For individuals who are starting an LLP, this is a huge advantage for them. Tax audits are only compulsory in cases where annual donations exceed INR 25 lakh and total income exceeds INR 40 lakh.
8. Partners mid-way entry or exit: One more fundamental aspect is allowed in the LLP agreement that the new partners who have their own companies can be added and old partners can easily leave the company. However, the current partners are required to approve the addition of a new partner.
9. Taxation outlook: The tax rate for limited liability partnerships is a flat 30% of their total turnover. An LLP should also pay an additional 12% surcharge on the income tax if the total income is more than INR 1 crore. Along with paying income tax plus the surcharge, there is also a 4% health and education fees to be paid.
To Sum Up
LLP partnership structure is more effective for companies that offer services or are engaged in technical or professional domains. It is also appropriate for companies that offer venture capital funding. We can conclude after reading this blog that registering your business as an LLP form of structure is more beneficial than any other form of business.
