LIMITED LIABILITY PARTNERSHIP (LLP)

A new trend that has been observed of-late is that more and more entreprenuers have start adopting for Limited Liability Partnerships. But What is a Limited Liability Partnership?

Before answering this question we’ll explain you reasons behind the emergence of LLP’s. Till a few years back there used to be only 2 forms of Organisations

1.       Limited Liability Organisations i.e. Companies

2.       Unlimited Liability Partnerships i.e. Partnership/ Proprietorship

the concept of Limited Liability Partnership was evolved which incorporates the benefits of both Companies as well as Partnerships.

Limited Liability Partnership entities, the world wide recognized form of business organization has been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.

ADVANTAGES

• Renowned and accepted form of business worldwide in comparison to Company.
• Low cost of Formation.
• Easy to establish.
• Easy to manage & run.
• No requirement of any minimum capital contribution.
• No restrictions as to maximum number of partners.
• LLP & its partners are distinct from each other.
• Partners are not liable for Act of partners.
• Less Compliance level.
• No exposure to personal assets of the partners except in case of fraud.
• Less requirement as to maintenance of statutory records.
• Less Government Intervention.
• Easy to dissolve or wind-up.
• Professionals can form Multi-disciplinary Professional LLP, which was not allowed earlier.
• Audit requirement only in case of contributions exceeding Rs. 25 lakh or turnover exceeding Rs. 40 lakh.

DISADVANTAGES

• Any act of the partner without the other partner, may bind the LLP.
• Under some cases, liability may extend to personal assets of partners.
• Cannot raise MONEY from Public

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