LLP

Introduction to LLP
A limited liability partnership is a flexible form of partnership that blends elements of partnership
and corporate structures. it is a hybrid business entity having certain characteristics of both a
corporation and a partnership or sole proprietorship, in limited liability partnership the liability of
a each partners are limited and flexible and it is a new concept for india but it is very concept for
western countries.

Concept of LLP
The LLP concept is based on two separate entity concepts, a partnership and limited liability.
Before the LLP became available as an entity choice for business owners, the concept of a
partnership and limited liability were mutually exclusive. The LLP entity is often the ideal choice
for business offering specific types of professional services. And LLP is new concept for India
but it too common and old for western countries.

Characteristics of LLP
In LLP minimum number of partners is 2 and there is no maximum.

LLP shall maintain annual accounts.

No exposure of personal assets of the partner, except in cases of fraud.

Perpetual succession is an important feature of LLP.

The LLP allow its members the flexibility of organizing their internal structure as a partnership
based on an agreement.

LLP shall be a corporate body and a legal entity separate from its partners. It has a perpetual
succession.

LLP can also take actions like mergers amalgamations. So there are provisions for winding up
and dissolution.
Every LLP should have two "Designated partners" at least one of whom should be a resident
Indian satisfying the conditions stipulated by the central government.
Advantages
The LLP is a separate legal entity.

The LPP is easy to establish.

There is no requirement of minimum capital contribution.

There is no restrictions as to maximum number of partners in LLP.

LLP & its partners are distinct from each other

Partners are not liable for Act of other partners.

Personal assets of the partners are not exposed except in case of fraud.

LLP is easy to dissolve or wind-up.

In LLP less Cost is required for formation as Compared to a company.

Disadvantages
LLP cannot raise funds from Public

In LLP under some cases, liability may extend to personal assets of partners.

In LLP there is no separation of Management from owners.

Difference between Partnership and LLP

Basis Partnership LLP

Registration Not compulsory. Compulsory registration required

with the ROC.

Is a separate legal entity.

Legal entity Not a separate legal entity.
Limited to the extent of the
Liability Unlimited, can extend to the contribution to the LLP.
personal assets of the partners.

No. of Minimum of 2. No maximum

partners. 2- 20 partners
No requirement of minimum capital
Capital The contribution in capital is contribution.
contribution required in partnership.