The Protection Provided by Limited Liability The concept of limited liability is an important protection for shareholders in a company. What this means is that shareholders can only lose (are therefore liable for) the value of their investment in the share capital of the company.

1. Minimising personal liability. The biggest benefit of forming your own company is limited liability protection. Any debt, losses, or legal claims associated with the company are the responsibility of the company itself – not its owners (shareholders/guarantors) or directors.

Benefits of an LLP Limited liability protects the member’s personal assets from the liabilities of the business. LLP’s are a separate legal entity to the members. This may allow for greater flexibility in the management of the business. The LLP is deemed to be a legal person.

This creates a significant advantage over corporations, whose shareholders do not receive any personal financial relief from their company’s losses. Limited liability organization owners receive tax deductions and lower reported income for business losses.

Profits subject to social security and medicare taxes. In some circumstances, owners of an LLC may end up paying more taxes than owners of a corporation. Salaries and profits of an LLC are subject to self-employment taxes, currently equal to a combined 15.3%.

Limited liability is a legal structure of organizations that limits the extent of an economic loss to assets invested in the organization and that keeps the personal assets of investors and owners off-limits.

Advantages and disadvantages of Private Limited Company

• No Minimum Capital.
• Separate Legal Entity.
• Limited Liability.
• Fund Raising.
• Free & Easy transfer of shares.
• Uninterrupted existence.
• FDI Allowed.
• Builds Credibility.

Besides, limited liability and minimal statutory compliances, pvt ltd companies offer the following advantages:

• Separate Legal Entity.
• Uninterrupted existence.
• Limited Liability.
• Free & Easy transferability of shares.
• Owning Property.
• Capacity to sue and be sued.
• Dual Relationship.
• Borrowing Capacity.

An employee has the right to paid public holidays and leaves such as casual leave, sick leave, privilege leave and other leaves. For every 240 days of work, an employee is entitled to 12 days of annual leave. An adult worker may avail one earned leave every 20 days whereas its 15 days for a young worker.

The prime interest of any owner in any business is yielding a healthy return from the capital and efforts invested in the entity. In case of LLP, working Partners of LLP may get the return in form of remuneration, which is allowable up to certain limit as prescribed under the Income Tax Act.

Henceforth, any Non Resident Indian or the foreign national is allowed to invest in LLP through appointment as partner or designated partner. There is no limit prescribed on infusion of capital by the partners or number of partners under this category.

LLP to Sole Proprietorship

1. No, an LLP cannot be converted into a Sole Proprietorship firm.
2. In Limited Liability Partnership, there is a statutory requirement of having a minimum of two partners with no upper limit.
3. Limited Liability Partnership registration is governed under the jurisdiction of Central Government.

Seriously, as a sole proprietor, you may have one (1) business or several businesses. There is no limit to the number of businesses in which you may engage. The Internal Revenue Service says you must report your income and your expenses from any endeavor entered into with a profit motive.

If you bought any business assets when you were working as a sole trader, you’ll be able to transfer them to your limited company when you incorporate. However, there might be tax implications of doing this, therefore it is vital you speak with an accountant for bespoke advice.

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. Therefore, LLP cannot raise funds from public in any form.

As needed with Loan agreement LLP can accept/ raise Funds from Partners as Loan. LLP is an legal entity and it is distant from the partners and it can accept loan from partners. Making such fund raising transaction transparent with other partners , LLP and partner can execute Loan from Partner in LLP agreement.

Unlike a company, an LLP does not have shares or shareholders, nor does it have directors – it simply has members. Unlike a company, an LLP does not have articles of association which must be publicly filed with the Registrar of Companies.

Yes, Limited Liability Partnership ( LLP) take a loan from partner. LLP is an legal entity work as an artificial person. As per LLP Act 2008 there is no restriction on to accept loan from Partner. Partner can decide to give loan to LLP on interest.