Convert Company into an LLP

A limited liability partnership (LLP) is a partnership in which partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of a limited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one "general partner" with unlimited liability.

Unlike corporate shareholders, the partners have the right to manage the business directly. As opposed to that, corporate shareholders have to elect a board of directors under the laws of various state charters. The board organizes itself and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability from that of a corporation.

There are many advantages of being a LLP. if you’re having the private limited company then by converting into the LLP you will have the following advantage

Tax Benefit

The most important reason for conversion of a company into an LLP is on the tax front. LLPs are taxed like general partnership firms. LLPs tax payment is lower than that of companies

 No Limit on number of shareholders/partners

Unlike private limited companies (shareholders limited to 50), an LLP can have unlimited number of partners.

 Minimal Compliance Level & Cost effective model

There is no need of compliances related to meetings and maintenance of huge statutory records.

 Automatic transfer

All the assets and liabilities of the Company immediately before the conversion become the assets and liabilities of the LLP.

 No Stamp Duty

All movable and immovable properties of the company automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.

 No Capital Gain Tax

No Capital Gains tax shall be charged on transfer of property from Company to LLP.

 Continuation of Brand Value

The goodwill of the Company and its brand value is kept intact and continues to enjoy the previous success story with legal recognition.

 Carry forward and Set off Losses and Unabsorbed Depreciation

The accumulated loss and unabsorbed depreciation of Company is deemed to be loss/ depreciation of the successor LLP for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor LLP.
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