Limited Liability Partnerships (LLPs) are commercial vehicles which combine the features of partnership and company form of business. A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization. In an LLP one partner is not responsible or liable for another partner’s misconduct or negligence.In an LLP, all partners have limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a limited company. However, unlike the company shareholders, the partners have the right to manage the business directly.
- Separate legal entity.
- Easy to establish.
- Flexibility without imposing detailed legal and procedural requirements.
- Perpetual existence irrespective of changes in partners.
- Internationally renowned form of business in comparison to Company.
- No requirement of 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 other partners.
- Personal assets of the partners are not exposed except in case of fraud.
- Easy to dissolve or wind-up.
- Professionals like CS / CA / CWA / Lawyers can form Multi-disciplinary Professional LLP.
- No requirement to maintain statutory records except Books of Accounts.
- Less Cost of formation (Compared to a company).
- LLP cannot raise funds from Public.
- Any act of the partner without the other may bind the LLP.
- Under some cases, liability may extend to personal assets of partners.
- No separation of Management from owners.