{"id":101,"date":"2017-07-07T06:45:36","date_gmt":"2017-07-07T06:45:36","guid":{"rendered":"http:\/\/ventureasy.com\/blog\/?p=101"},"modified":"2019-05-15T09:50:44","modified_gmt":"2019-05-15T09:50:44","slug":"limited-liability-partnership-llp-vs-partnership","status":"publish","type":"post","link":"https:\/\/ventureasy.com\/blog\/limited-liability-partnership-llp-vs-partnership\/","title":{"rendered":"Limited Liability Partnership (LLP) vs Partnership"},"content":{"rendered":"

Selection of the correct form of business entity is the most important decision taken by an entrepreneur. To make choices simpler and assist you in taking a well informed decision, here is a basic comparison chart of Limited Liability Partnership (LLP) vs Partnership<\/p>\n

Limited Liability Partnership \u2013 A corporate form of Partnership<\/strong><\/p>\n

Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to maintain while at the same time providing limited liability to the owners. It exhibits elements of both partnership and corporation. In LLP, one partner is not responsible or liable for another partner’s misconduct or negligence unlike a traditional partnership in which each partner has joint and several liabilities.<\/p>\n

\"Private
Limited Liability Partnership (LLP) vs Partnership<\/figcaption><\/figure>\n

Partnership<\/strong><\/p>\n

Partnership is governed by Indian Partnership Act, 1932. It is the relation between two or more partners who have agreed to share the profits of a Business carried on by all or any of them acting for all. The partners can enter into a verbal or written agreement between them as per their discretion. The Registration of partnership firm is not compulsory.<\/p>\n

The Comparison chart will give you a clear distinction between all the three forms of business.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Factors of Comparison<\/strong><\/td>\nLimited Liability Partnership<\/strong><\/td>\nPartnership<\/strong><\/td>\n<\/tr>\n
Legal Identity<\/strong><\/td>\nIt has separate Legal entity different from partners<\/td>\nNo separate legal entity<\/td>\n<\/tr>\n
Minimum Members<\/strong><\/td>\n\u00a0 Designated Partners \u2013 2<\/td>\nMinimum Partners \u2013 2<\/td>\n<\/tr>\n
Maximum Members<\/strong><\/td>\nNo limit<\/td>\n100<\/td>\n<\/tr>\n
Minimum Capital<\/strong><\/td>\nNo minimum requirement<\/td>\nNo minimum requirement<\/td>\n<\/tr>\n
Regulator<\/strong><\/td>\nRegistrar of Companies<\/td>\nRegistrar of Firms<\/td>\n<\/tr>\n
Compliance Requirements<\/strong><\/td>\nAnnual Return Filing<\/td>\nNo mandatory compliances<\/td>\n<\/tr>\n
Taxation<\/strong><\/td>\nTaxed at 30%<\/td>\nTaxed at 30%<\/td>\n<\/tr>\n
Cost of compliance<\/strong><\/td>\n<\/td>\nAs there are no compulsory compliances for a partnership firm, there are no cost of compliance as such<\/td>\n<\/tr>\n
Liability<\/strong><\/td>\nLimited to Capital contribution<\/td>\nUnlimited liability of partners<\/td>\n<\/tr>\n
Credibility<\/strong><\/td>\nMedium<\/td>\nLow<\/td>\n<\/tr>\n
Investor Preference<\/strong><\/td>\nMedium<\/td>\nLow<\/td>\n<\/tr>\n
Statutory Audit<\/strong><\/td>\nMandatory if Contribution is above 25 lacs or, if Turnover is above Rs. 40 lacs<\/td>\nNot Mandatory<\/td>\n<\/tr>\n
Conversion<\/strong><\/td>\nCan be converted into a Company by following the procedures of Companies Act<\/td>\nCan be converted into a Company by following the procedures of Companies Act<\/td>\n<\/tr>\n
Procedure<\/strong><\/td>\n\n
    \n
  • Obtain DSC (Digital Signature Certificate)<\/li>\n
  • Obtain DPIN (Designated Partner Identification Number)<\/li>\n
  • Name Approval<\/li>\n
  • Filing for Incorporation<\/li>\n
  • File LLP Agreement<\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Preparation of Partnership Agreement<\/li>\n
  • Stamping and Notarization of the partnership agreement.<\/li>\n
  • Registration of Agreement with the Registrar of Firms \u2013 Not compulsory, very expensive and time consuming<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Time Taken for Registration<\/strong><\/td>\n10 -15 Days<\/td>\n7-10 days<\/td>\n<\/tr>\n
Relation inter se partners<\/strong><\/td>\nPartners are the agent of firm and the partners. One is responsible for the act of other(s)<\/td>\nPartners are agents of the firm only.<\/td>\n<\/tr>\n
Ease of closure<\/strong><\/td>\nAn LLP can be closed by meeting certain conditions and following the procedures of LLP Act 2008.<\/td>\nA Partnership can be closed anytime as per the conditions laid down in the deed or agreement.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Conclusion<\/strong>:<\/p>\n

– Partnership firm, even if registered, is not a separate legal entity.<\/p>\n

– LLP is comparatively a more organized form of business, hence has more credibility.<\/p>\n

– Partners of a partnership are agent of one another, which makes all the partners responsible for any fraudulent act of one of the partners.<\/p>\n

– And partners are personally liable to the extent of dues of the partnership. But contrary to this, in LLP, partners are not liable for the act of one another. They are only responsible for their acts and liable to the extent of their contribution.<\/p>\n","protected":false},"excerpt":{"rendered":"

Selection of the correct form of business entity is the most important decision taken by an entrepreneur. To make choices simpler and assist you in taking a well informed decision, here is a basic comparison chart of Limited Liability Partnership (LLP) vs Partnership<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-101","post","type-post","status-publish","format-standard","hentry","category-limited-liability-partnership"],"yoast_head":"\r\nLimited Liability Partnership (LLP) vs Partnership - VenturEasy<\/title>\r\n<meta name=\"description\" content=\"To make choices simpler and assist you in taking a well informed decision, here is a basic comparison chart\u00a0of LLP vs Partnership\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/ventureasy.com\/blog\/limited-liability-partnership-llp-vs-partnership\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Limited Liability Partnership (LLP) vs Partnership - 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