How Can You Close Your LLP When You Aren’t Making Any Profits?

LLP Closure

How Can You Close Your LLP When You Aren’t Making Any Profits?

Dec 18, 2020 Company by admin

Businesses are an enigma. At times, they can take you to the greatest heights. But sometimes, their performance becomes less than lacklustre. So much in fact that letting go and closing your business is the only option you have left. An LLP, which combines the personal touch of a partnership firm with the limited liability of a company, should always give you a win. However, certain circumstances make it necessary to shut the LLP down. While you can take measures to protect it, a bad business is like a festering wound. If you don’t cut it off, it can infect your entire financial credit.

Thus, we are here to tell you not about how to lift your LLP up from the financial hell, but to surgically remove it. Here, we tell you about LLP closure procedure.

Also read about Trademark registration.

Procedure to Close LLP in India

It’s a common knowledge and more startup LLPs are growing in India like weed. While a few of them become useful grass, some of them need to be weeded out. It sounds harsh, but if your LLP is one of them, you should close your LLP in India, so that you later focus on creating a green grass. The process is as follows:

  1. Pass the resolution to close the LLP: 75% percent of the partners at your LLP must agree to close the LLP. Once you get them to agree, pass the resolution.
  2. File form 1: File the resolution in Form 1 within 30 days of passing the resolution.
  3. Declare that your LLP doesn’t owe any debt: Closing an LLP is not possible if you have some debts accrued. Thus, you must first clear your debts in any way possible. It has to be done within a year of filing the resolution. Once that’s finished, declare that you don’t owe debts.
  4.  File the value of your assets and Form 4: Declare the value of your assets to the registrar to close the LLP. Along with the declaration, file and submit Form 4 to declare that you aren’t closing your LLP for fraudulent purposes.
  5. Get the consent of the creditors: You can’t close your LLP without getting a nod from your unpaid creditors. If you get 66% of these creditors to give you the consent, you are once stop closure to closing your LLP.
  6. Appoint a Liquidator: Within 14 days of receiving the creditor’s consent, advertise that you are closing your company. Then, appoint a liquidator and get his/her statement on Form 6.
  7.  Finalize your account details: It’s the last step to close your LLP. File Form 9 detailing your account details. Once filed, it will complete the formality (the LLP Closure documents submission) part of the process. The rest is up to the government agencies that aren’t going to take more than 1 week to shut down your LLP.

As you can observe, most steps above involve documentation and interacting with the government agencies. Only the experts can do that. To completely leave your business partnership behind, contact our business specialists. Charging a low LLP closure fees, they initiate and end the process in record time.