Overview
The legal form of a business affects liability, tax, compliance cost, ability to raise funds and ease of exit. A proprietorship is simple but offers no limited liability; an LLP gives limited liability with lighter compliance; a private company is best suited to raising equity.
Group structures, holding companies and conversions between forms have their own tax and legal consequences, which should be examined before implementation.
Who needs this service
Legal and regulatory framework
- Indian Partnership Act, 1932
- Limited Liability Partnership Act, 2008
- Companies Act, 2013
- Income-tax law on conversion and restructuring
- SEBI (AIF) Regulations, 2012 for fund structures
Scope of services
Comparison of structures
- Liability, tax rates, compliance and funding for each option
- Recommendation with reasons
Setup
- Incorporation or registration
- Initial compliance set-up
Restructuring
- Conversion of firm or company into LLP
- Holding structures
- Tax-neutral transfer conditions
How the engagement works
- ObjectivesOwnership, funding, exit and family needs.
- OptionsStructures compared on law and tax.
- RecommendationPreferred structure and steps.
- ImplementationFilings and documentation.
Documents typically required
Key forms and due dates
| Item | Timeline |
|---|---|
| Timeline | Agreed based on structure and approvals required |
Deliverables
- Structuring note with comparison
- Implementation plan
- Incorporation filings
The scope of each engagement is agreed in writing and depends on the nature, size and regulatory requirements of the entity.
Frequently asked questions
What is the tax rate for a company versus an LLP?
Domestic companies can opt for a concessional rate of 22% (plus surcharge and cess), while LLPs and firms are taxed at 30% (plus surcharge and cess). The right choice also depends on how profits are distributed.
Can a partnership firm be converted into an LLP?
Yes, under the LLP Act, 2008, and it can be tax-neutral if prescribed conditions are met.