The Limited Liability Partnership (LLP) A New Business Model

Previously, if you want to conduct a business, your choice might be a sole proprietorship or conventional partnership. If you want to set up a sizeable business, it might register a limited company. With effective from 2012, you now have a new option, which is a Limited Liability Partnership (LLP) availability for the small and middle business.

What is the Limited Liability Partnership?

The LLP is a combination of limited company and conventional partnership, which have a benefit of both entities. As a partner, it may contain of minimum 2 persons or entity, however, with no limit of number of partners. Its objective is to seek a profit motive and conducting a lawful business.

Why register a Limited Liability Partnership?

LLP can be summarized with 5S point as follows:

1) Separate Legal Entity

Similar with a company, it can owned, developed and disposal a property under the entity. Furthermore, the LLP can sue or being sued. Therefore, the asset is under the firm name will no be take away when the partner leaves.

2) Shield of protection to partner

New LLP is providing a complete protection to the partner. The Partner’s contribution will be protected from the risk. Therefore, the loss suffer by a partner limited to the total contribution within the firm and will not involve their own property. For SME business, it allows the business expansion without any restriction by the limited capital.

3) Saving of cost

Setting up an LLP is more cheaper that a limited company, the registration fee is only RM30.00 and RM500.00. example : name search fee and registration fee respectively. After the 3 months of financial year end, the LLP require to submit an annual declaration with the payment of RM200.00 to the Companies Commission Of Malaysia (CCM). In short, it is affordable by all SME.

4) Succession Perpetually

Most of the Chinese business is through succession from one generation to another generation, and LLP meets the need. Therefore, no matter any partner enter and leave the firm will no affect the firm. As long as the total number of partner no less that 2. If the total number less that 2, it will require to search for a new partner within a half year in order to avoid against the law.

5) Simple To Manage

Due to the shareholder and director is a same person, it will simplify the business structure. Therefore, it will not need to hold a general meeting, appoint an auditor, allotment of shares. Avoiding those complicated expenses. The firm is required to submit an annual declaration, which is a statutory declaration to declare the entity are able to repay all the debt when fall due.

Who are suitable to adopt a LLP?

Ordinary it was granted to legal firm, accountant firm and company secretary. But now it was open to all kind of SME.

Conclusion

In the new GST era, business are encountered challenge, if the business can adopted a new business model, it will be more flexible and cost saving, and will be more competitive.