LLP is a corporate business form that provides twin benefits i.e. benefit of limited liability of a company and the flexibility of a partnership.
All rights and duties of the partners of LLP are governed by the Partnership Agreement of the said LLP.
Advantages of LLP
No partner is liable on account of the independent or un-authorized actions of other partner(s).
- Better organized and operates on the basis of their LLP Agreement.
- Lesser MCA Compliances as compared to Company
- LLP can have unlimited Partners
Difference between LLP and Traditional Partnership Firm
- There is unlimited liability of all partners in case of Traditional Partnership Firm and each partner is liable, jointly with other partners and also severally for all acts of the frim.
- Under LLP structure, liability of the partner is limited to his agreed contribution. Also, none of the partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.
Difference between LLP and Company
- Cost of incorporation of LLP and a Company is almost same.
- LLP will have more flexibilityas compared to a company.
- LLP will have lesser compliance requirementsas compared to a company.
- LLP can raise funds from Banks, NBFCs, Partners whereas Company can raise funds Venture Capitalists, Angel Investors, Banks, NBFCs.