1, 2, 3 and 4
2, 3, 4 and 5
2, 4 and 5
1, 2, 3, 4 and 5
Answer is Right!
Answer is Wrong!
The correct answer is: D. 1, 2, 3, 4 and 5
Here is a brief explanation of each option:
- Less compliance cost. LLPs are not subject to the same level of compliance requirements as companies. For example, LLPs are not required to hold annual general meetings or file annual returns with the Registrar of Companies. This can save LLPs a significant amount of time and money.
- Audit necessary only if turnover and contribution exceed Rs. 40 lacs and Rs. 25 lacs respectively. Companies are required to have their accounts audited by a qualified auditor every year, regardless of their turnover or contribution. LLPs, on the other hand, are only required to have their accounts audited if their turnover or contribution exceeds Rs. 40 lacs and Rs. 25 lacs respectively. This can save LLPs a significant amount of money.
- The partners can distribute the profits among themselves without attracting any further taxation, i.e., Dividend Distribution Tax. Companies are required to pay Dividend Distribution Tax (DDT) when they distribute dividends to their shareholders. LLPs, on the other hand, are not subject to DDT. This means that the partners of an LLP can distribute the profits among themselves without having to pay any additional tax.
- Various stringent provisions that prohibit the Company to take loans from individual or give loans to the respective Director are not there in case of LLP. Companies are subject to a number of restrictions on their ability to borrow money from individuals or to lend money to their directors. These restrictions are designed to protect the interests of creditors and shareholders. LLPs, on the other hand, are not subject to these restrictions. This means that LLPs have greater flexibility in their financing arrangements.
- There are no restrictions on related party transactions in case of LLP. Companies are subject to a number of restrictions on their ability to enter into related party transactions. These restrictions are designed to protect the interests of creditors and shareholders. LLPs, on the other hand, are not subject to these restrictions. This means that LLPs have greater flexibility in their business dealings.
In conclusion, there are a number of general benefits of forming an LLP. These benefits include lower compliance costs, less stringent auditing requirements, the ability to distribute profits without attracting DDT, greater flexibility in financing arrangements, and no restrictions on related party transactions.