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Convert Private Limited Company to LLP

Change to a simpler organisational structure and get rid of the cumbersome business regulations

*Subject To Change On Market Conditions

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The Limited Liability Partnership Act of 2008 brought the Limited Liability Partnership (LLP) concept to India. All participants in a limited liability partnership have limited liabilities, as the name implies. A limited liability partnership, a cross between a partnership firm and a corporation, is an alternative corporate form of business organisation that offers both the flexibility of a partnership and the restricted liability of a corporation. LLP registration is frequently used by startup businesses and entrepreneurial initiatives. It should be emphasised that because the stamp duty is a state prerogative, each state will determine how much the conversion charge will be in relation to the stamp duty.

Advantages that come with converting a PLC into a LLP

1. TAX BENEFITS:

The tax aspect is the primary motivation for converting a corporation into an LLP.
Limited Liability Partnerships are not subject to the surcharge and are taxed similarly to regular partnership firms.
The Income-tax Act of 1961 currently mandates that businesses pay both the dividend distribution tax (DDT) and the minimum alternate tax (MAT).
When property is transferred from a company to a limited liability partnership, neither capital gains tax nor dividend distribution tax are due by the limited liability partnership.

SAVINGS ON COMPLIANCES COSTS:

Private limited companies now have to comply with statutory requirements under the Companies Act of 2013, which raises the cost of compliance. The cost of compliances is very low since there are very few requirements for statutory compliances in terms of the quantity of meetings that must be held and the upkeep of statutory documents.

NUMBER OF SHAREHOLDERS OR PARTNERS IS UNLIMITED:

There is no cap on the maximum number of partners that can be in a limited liability partnership.

DO NOT STAMP:

All of the company's assets, both movable and immovable, automatically vest in the LLP. No instrument of transfer must be signed, and as a result, no stamp tax must be paid.

LESS COMPLIANT:

Compared to a private limited company, a limited liability partnership requires less compliances, which results in greater financial savings. There are only two regulatory filing requirements for Limited Liability Partnerships: the Annual Return and the Statement of Account and Solvency.

AUDIT NOT REQUIRED:

If an LLP's annual revenue is less than Rs. 40 lakhs and its capital contribution is less than Rs. 25 lakhs, an audit is not necessary. As a result, LLPs are perfect for startups and small enterprises that are just starting out and wish to have as little formalities as possible linked to regulatory compliance.

Conversion of a PLC into a LLP

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