What is Limited Liability Partnership (LLP)? How it works

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Limited Liability means limited to the amount they put into the business. A Limited Liability Partnership (LLP) is a partnership firm in which some or all partners have limited liabilities or risk. LLP exhibit elements of partnerships and corporations.

What is Limited Liability Partnership (LLP):

As per the Wikipedia, “A Limited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.”

How Limited Liability Partnership (LLP) works:

Having business partners means spreading the risk, leveraging individual skills and expertise, and establishing a division of labor.

Most of the times startups need to borrow money and take things on personal credit. In case of normal Partnerships firm, Partners personal savings and property would be at risk in case business is not able to repay its loans. In an LLP, only investment to start a business is lost, personal assets of the Partners are safe and no any risk.

LLPs are common in professional business like law firms, accounting firms, and wealth managers.

Initially for LLP commercial office space is not required. You can show your own residential or rented home address as the registered office address of LLP. This office address can be changed at any time after incorporation of LLP.

Documents required for Limited Liability Partnership (LLP):

You need to arrange very simple documents of directors like

1] Photograph,
2] Pan card and
3] one address proof.

Along with this you may require following documents for LLP:

1] Minimum 2 Partners
2] DIN (Director Identification Number) for all the Designated Partners
3] If a body corporate is a Partner, it has to nominate a natural person as its Nominee
4] DSC (Digital Signature Certificate) for all the Designated Partners
5] There is no concept of share capital, but each Partner has to contribute towards capital of LLP
6] Address proof for office of LLP

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