Limited Liability Partnership is governed by the Limited Liability Partnership Act, 2008. This business form is extended version of traditional partnership firm which provides limited liability benefits to its partners. LLP provides you the advantages of company with flexibility of partnership firm. An LLP is registered as per the guidelines of Ministry of Corporate Affairs. In this form of business, one partner is not liable for another partner’s misconduct and negligence. An LLP also provides limited liability protection to its partners from the external debt/ creditors as partners are liable only to the extent of its capital contribution. In case of default, Only LLP’s assets can be sold for repayment of debt not the personal assets of partners. LLPs do not have advantages of issuing equity shares or raising funds from angel investors, venture capitalist etc. but LLPs can raise funds from its partners, banks and NBFCs.
Why Choose LLP?
- Separate Legal Entity i.e. LLP and partners are considered as separate person.
- Perpetual Succession i.e. business will survive forever until unless business is brought into end by the mutual agreements of partners.
- Less Expensive and easy to incorporate & manage than a Company.
- Liability of partners are limited to the contribution made by partners.
- No Audit Requirement except where annual turnover is more than Rs. 40 Lakhs or Contribution is more than Rs. 25 Lakhs.
- No minimum Capital contribution.
- Less Compliances and formalities in compare to Private Limited Company.
Easy to transfer the ownership of LLP by just appointing the person as partner.