CLOSING A LIMITED LIABILITY PARTNERSHIP
Limited liability partnership states that all the partners involved in a business have limited liabilities. In short, if one partner has performed a mistake it won’t be bearded by other individuals present in the business. Limited liability partnership is famous for its benefits. It’s a legal entity. The law for LLP has been recently amended and it seems like now it is much easier to close LLP as compared to earlier times.
But unfortunately not all things work for us; hence you may face some issues in this kind of partnership. Hence, some people prefer to close this.
There can be many possible reasons that the entrepreneurs think of closing the LLP they once were excited for like–
- Some entrepreneur might have started their business using this technique but their business is unable to give returns, hence they are choosing for the closing of LLP
- They have become bankrupt
- The task for which LLP was created has been finished
- The business has become dysfunctional
- Due to legal issues, LLP has been given a stay order by the court
PROCEDURE FOR CLOSING A LLP –
There are penalty charges for default LLP's hence it is best to close it if not in use.
- Steps 1 – All the commercial activity must be stopped before filing LLP.
- Step 2 –Check that no loan or debt is there against the company. Even if the company has debt you can still choose to close the lap but in that case, you have to give the guarantee that the loan must be repaid within 1 year of this application.
- Step 3 –Affidavit is prepared by all the partners involved in this business activity. Written application by all the individuals involved has to be submitted by the people who formed the LLP.
- Step 4 –Form 1 has to be filled and submitted for further allocation of closing your LLP. Along with it all necessary documents also have to be submitted.
- Step 5 –The total value of all your assets have to be determined and mentioned in the form. Remember all the information entered must be true and verified. As in the case of wrong information, further complications might arise.
- Step 6 –Get the consent form done by the investors involved in your LLP
- Step 7 –In the end, all you need is a liquidator that would be needed to file the consent and other related documents.
- Step 8 –In the final verification of your consent form and documents have to be done. Your LLP will be checked. LLP account details along with form 9 have to be submitted and in a short period of time, your LLP will be closed.
As mentioned above the main reason for the popularity of LLP was its benefits. Not all the members had to suffer in case one performs a mistake, but there could be many reasons for its un-functionality. LLP closure is so common that its procedure has become simple and less time-consuming.
If you are choosing to close your LLP, choose only a trusted and well-experienced partner like Qiklegal.