Limited Liability Partnership is a hybrid version of company and partnership firms although it is a partnership with the features of a company. As a partnership firm the LLP also has partners in it and they look into all the matters of the LLP. LLP has the features of the partnership but still, there are many differences between LLP and partnership firm and these are:
| Grounds | Partnership | LLP |
|---|---|---|
Law | For a partnership firm, the rules and regulations are made in the Indian Partnership Act, 1932 | It is regulated and administered through the Limited Liability Act, 2008 |
Name | There is no need to add “partnership” or “partnership firm” at the end of the name. | The word “LLP” shall be added at the end of the name. |
Partner | Minimum 2 partners are required and a maximum of 50 people can be the partner in the firm | Minimum 2 people are required as designated partner and for the maximum number of partners there is no limit which means in LLP the partners can be 50 or 500, or any number |
Capital | No minimum capital requirement | No minimum capital requirement |
Registration | The registration is optional | The registration is mandatory to start the LLP |
Identity | In the eye of the law, the partnership doesn’t have any legal identity therefore the partners of the firm and the firm are considered as the same | The LLP has its own identity which is different from its partners therefore, it is said that the LLP is a separate legal entity. |
Liability | The liabilities of the partners are unlimited which means the partners are always personally liable for every liability or debt of the firm | The liabilities of the partners are limited and it is only extended to the unpaid amount of their capital contribution. No partner shall be personally liable for any debt or liability incurred by the LLP |
Regulatory Body | It is governed by the State Government | It is governed by the Central Government through ROC. |
Perpetual Succession | The life of the firm depends upon the will of the partners. If any partner dies during the tenure, the firm will get dissolved | The LLP cannot get closed until an application is filed to the ROC the partners may come and go it doesn’t affect the life of the LLP |
Bye-Laws | All the bye-laws and details of the firm are mentioned in the partnership agreement | The LLP agreement consists of all the details of the LLP like details of the partners, business activity, rights, duties, limitations etc. |
Foreign Partners | No Foreign resident can become a partner in the partnership firm | A Foreign resident can be the partner or designated partner in LLP |
Holding Assets | All the partners hold the assets jointly held by the partnership firm | The LLP can buy, sell or transfer the property in its name, no partner has any right on the property held by the LLP |
Partner Identification Number | Any partner of the firm doesn’t have any identification number | The designated partner of the LLP has DPIN which is allotted by the ROC |
DSC | There is no need to have any DSC for the firm registration | Without DSC an LLP cannot get registered. |
Compliance | There is no as such compliances rule applicable on partnership firm | The LLP has to do all the mandatory compliances every year within the specified time limit |
Reliable | The partnership firm has less reliability because it is not regulated by any specific authority | It is regulated by the ROC, therefore; it is more reliable than a partnership firm |
Due to the above differences, it is always better to start the business under the name of LLP because it attracts investors more in comparison to the partnership. After all, there is a proper authority who administer the LLP and the risk of fraud is very low as the LLP has to follow all the norms which are framed for it.
Register Experts will help you in getting the certificate of LLP incorporation with 10-15 days without any hassle, you only need to provide the required documents and all the documents shall be provided in soft copy means no need to submit any hard copy for this registration.
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