There are certain legal procedures that come into play when you try and form an LLC (Limited Liability Company) in India. However, you would be assured to know that they are quite hassle-free so as to say. All you need to do is decide on who would be partnering you and apart from that you need to decide the mode of business as well. There is also a Memorandum and some Articles of Association that needs to be signed and then submitted to a Registrar. Along with this, there are also some prescribed fees that need to be paid in this case.
After this, the Registrar will follow up with all the procedures that are necessary and all you need to do is follow his instructions.
The main benefit of a limited liability company in India
Taking all things into account the main benefit of these companies is that they cost you the least when it comes to formation. If you do not believe this statement you can always do your own research and find out how much it costs to start the other kinds of companies in India. It also helps that they have the least amount of formal necessities as such. Apart from this, a limited liability company also happens to be the best format for small-scale companies as far as ease of operation is concerned. They can easily manage them and wind them up pretty easily if necessary.
Is it necessary to audit the accounts of a limited liability company in India?
Yes, there are certain regulations in India that make it obligatory for limited liability companies to get their books audited. Normally, there is a benchmark annual income crossing which you have to get your books done. You should know this when you try to form an LLC in India. In any case, it is very important to audit your books just so that you appear to be a legitimate proposition to your partners.
What rights do the partners have?
The laws in India already state the main duties of partners in a limited liability company. However, the rights, as well as duties and any other obligation for that matter, of the partners are mentioned clearly in the agreement signed by the partners at the time of incorporating the company. The best thing about these companies is that as a partner your liability is restricted to the contribution that you have made to the company.
This implies that in case you started an S-Corporation with your friend you would not need to highlight or as such show your own filial and personal assets to your partners or even the government for that matter.
Why should you opt for such a company?
If you own a limited liability company it means that only you and the other partners are owners. There are no shareholders to deal with in such a company and this means managing a company is much easier than one that has gone public. You also have limited liability as a partner in the sense you are not answerable for the mistakes made by the other partners.