Disadvantages of LLP Registration

Legal Status requires a lot of paperwork
Unlike Partnership, for LLP registration there needs to be made a lot of paperwork, due to the separate legal status it holds.

Difficulty in finding investment
Investors are reluctant to make investments in an LLP, they have to become partners to take some responsibility for the business. It does not have the concept of equity and shareholding

Higher penalty for non-compliance
Upon, LLP registration, an LLP has to pay a higher penalty for non-compliance as compared to a private limited company

At least two partners
At least two partners are needed, a sole partner after one has left can only function for a limited time for 6 months, after one partner leaves a single partner cannot run the business anymore.

Income Tax return to be filed
Besides having the advantage of limited filling, the returns filed by an LLP are higher even though there is no business happening or there are no profit margins. Irrespective of the turnover they are taxed at 30%.

Cannot raise money from the public
LLP cannot issue shares and raise money from the public as the partnership is limited to the participation of its partners only.
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