Difference between LLP and Partnership Firm

Limited Liability Partnership (LLP) is a relatively new form of business entity that was formed to overcome the limitations of the existing forms of business entity mainly, Partnership and Company. The need for LLP grew as small business owners who usually started off with the Partnership form of business had to bear unlimited liability despite their meager means. Thus, Limited Liability Partnership (LLP) provided the much needed respite by combining the best of both worlds. By drawing its characteristics from both the partnership and the company form, it is slowly catching up to be a popular way of organising the business. Following are the difference between LLP and Partnership Firm.


Difference between LLP and Partnership Firm

BasisLLPsPartnerships
Independent EntityIt has an entity separate from its owners.It does not have a separate entity.
Number of PartnersNo maximum limit but minimum shall be two.Maximum: 50
Minimum: 2
Governing LawThe Limited Liability Partnership Act, 2008Indian Partnership Act, 1932
Registration of the FirmRegistration mandatory with the Registrar of Companies (Roc)Not mandatory
Liability of the
partners
Limited to the extent of their contribution to the firm.Unlimited meaning their personal property can be used for paying off the firm’s liability.
Perpetual
Existence
It has a perpetual existence and is not affected by the death, admission, exit or retirement of partners.It does not have a perpetual existence.
Body Corporate As a PartnerCan be admitted as a partner.Cannot be admitted as a partner
Who owns the assets?Assets of the firm are owned by the LLP and not the partners.Assets of the firm are owned by the partners and not the firm.

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