What Is The Full Form Of LLP In Income Tax?
LLP full form in income tax is Limited Liability Partnership. This type of business setup is a mix of both partnership and corporation features. In an LLP, each partner’s risk of losing money is usually only up to the amount they have put into the business. Such an arrangement allows for profit sharing between the partners without each of them becoming accountable for the mistakes or wrong actions of the other. It is a favorite choice among professionals, from lawyers and accountants to consultants, interested in reducing personal risks yet keeping the flexibility of working in a partnership.
LLPs’ Security and Flexibility:
LLPs are chosen for their combination of safety in limiting personal losses and flexibility, which makes them appealing for professional services and new business ventures. You must read the advantage and disadvantage of LLP.
Formation and Registration Process:
In other words, at least two partners are a must to start an LLP. But in many parts of the world, like India, it is ensured that one partner in an LLP should be a resident of that country. Statutorily, there is a requirement to get it registered with the relevant local authority, such as the Ministry of Corporate Affairs in India. Since most of the decisions in an LLP are arrived at without formality by the partners, the parties involved should agree on the way the LLP will be operated, who will do what, and how the profits arising from it will be shared.