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
|Independent Entity||It has an entity separate from its owners.||It does not have a separate entity.|
|Number of Partners||No maximum limit but minimum shall be two.||Maximum: 50|
|Governing Law||The Limited Liability Partnership Act, 2008||Indian Partnership Act, 1932|
|Registration of the Firm||Registration mandatory with the Registrar of Companies (Roc)||Not mandatory|
|Liability of the|
|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.|
|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 Partner||Can 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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