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Wednesday, 1 June 2011

Registration of a Startup Venture: is a startup venture established in May 2011. We a group of young automotive professionals (and we take pride to be one), came up with this idea to bring all automotive (mind it only automotive and no other industry) professionals & manufacturers, service providers, Consultants, traders, under one roof.

By now we have finalized most of our strategic decisions viz; our Vision, Our Business Model, Mission, long term goals, targets to be achieved etc. Now it is the time for us to deliver these strategies. Only when we deliver, would our dreams be achieved. Whereas Sagar and Pramod are taking care of the Website Development and the content management, I am taking care of all other activities.

The first step I identify to deliver our strategies is to register the company. Only then we would be able to do business in India satisfying our code of conduct (To follow an ethical and legal way to do business).

A company can either be registered as a Partnership firm, a Company (Private or a Limited) or a Limited Liability Partnership. I have done enough analysis (Thanks to Google) on the advantages and disadvantages of each and came to conclusion that a Limited Liability Partnership (LLP), which offers advantages of both a Partnership firm and a Company.

Here are the details of a LLP and the advantages and disadvantages it offers:
LLP is a partnership formed and registered under the LLP Act, 2008. LLP is a hybrid business structure combining the features of a Partnership Firm as well as Limited Liability Company. LLP is a body corporate with perpetual succession and has a separate legal identity distinct from its partners. Further, the liability of the partners is limited to their agreed contribution in the LLP which may be of tangible and/or intangible nature.

Advantages of a LLP:-  
  • Liability is limited to the extent of agreed contribution of partners.
  • Formation is easy and less expensive.
  • No limit on maximum numbers of partners.
  • All partners not responsible for acts of defaulting partner.
  • Operation easy, similar to existing partnership firms.
  • Existing firms and companies can be converted to LLP.
  • Lesser Compliance, Govt. intervention, statutory record then Company.
  • Professionals also can form LLP to get Shield of Limited Liability.
  • Audit exemption till capital / contribution of Rs.25 lacs or Turnover of Rs.40 lacs per annum.

Disadvantages of a LLP:-  
  • Not allowed to raise loans from Public.
  • Action of single partner can bind LLP.

Thus, a LLP offers benefits of both a partnership firm as well as a company hence, will be registered as a LLP.