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Limited Liability Partnership (LLP) is business form which provides benefits of limited liability and flexibility of a partnership business. It is governed and registered under the Limited Liability Partnership Act, 2008 (notified on 31st March 2008) and the rules made there under. Small and Medium Enterprises (SMEs) can function as LLP. It has quickly become a popular choice for services and professional firms like Chartered Accountants, recruiting firms, consulting businesses, etc.
One of the main benefits of LLP is that the process of forming an LLP is easy and not time-consuming like that of a company.
The ownership of a LLP can be easily transferred to another person. However, transferee should be inducted as a Designated Partner of the LLP.There are no restrictions upon joining and leaving of partners in LLP.
An LLP is a Separate legal entity from its Partners in the eyes of law.It can have a PAN number, bank accounts, licenses, approvals, contracts, assets and liabilities in its unique name.
According to the provisions of the Act, the LLP will not be winded up in case of death, retirement or insolvency of a partner. The life of the LLP is not affected by the same
According to the provisions of the Act, regulatory compliance is very less in case of LLP as compared to company form of entity
Partners’ liability of the LLP is limited and it is limited only to their contribution by them to the LLP.No partner can be held responsible for the conduct of other partners.
There is no audit requirement unless the contribution of the LLP exceeds 25 lakh rupees or the turnover of the LLP exceeds 40 lakh rupees annually.
| Characteristics | LLP | Pvt. Ltd. Company | Proprietary Concern | Partnership Firm | OPC |
|---|---|---|---|---|---|
| Separate Legal Entity | YES |
YES |
NO |
NO |
YES |
| Governing Act | Limited Liability Partnership Act, 2008 | Companies Act, 2013 | No specific Act | Indian Partnership Act, 1932 | Companies Act, 2013 |
| Registration | Mandatory | Mandatory | Not Reuqired | Optional | Mandatory |
| Liability | Limited | Limited | Unlimited | Unlimited | Limited |
No. of Members |
2 or more partners | 2 - 200 | Only 1 | 2 or more partners, 10 for banking , 20 for non-banking | 1 Member and 1 Nominee |
Dissolution |
With Consent of partners | Legal procedures for winding up orliquidation as the case may be | The proprietor has the sole authority | The proprietor has the sole authority | Legal procedures for winding up orliquidation as the case may be |
Succession |
Remaining Partners | A company has perpetual succession | Legal Heir | Remaining Partners and Legal Heir of deceased partner with consent of other partners | Nominee |
| Filing of financials with regulatory authorities | Financial statements are to be filed annually with Registrar of Companies | Financial statements are to be filed annually with Registrar of Companies | Not Applicable | Not Applicable | Financial statements are to be filed annually with Registrar of Companies |
| Filing of forms for creation of charge (in case of loans taken). | Required to file adequate forms with Registrar of Companies | Required to file adequate forms with Registrar of Companies | No legal formalities | No legal formalities | Required to file adequate forms with Registrar of Companies |
| Statutory Compliance | Annual filing and few event based filings are necessary | Apart from Annual filings, it has to comply with various provision laid down, but less compared to public company | No compliances and no requirement to file a separate ITR | Separate ITR of partnership is filed, else there is no filing requirement | Apart from Annual filing, compliances are less compared to Private Company |
Audit Compliance |
Only if contribution more than Rs. 25 lakhs or turnover exceeds Rs. 40 Lakhs | Compulsory | Subject to turnover of the firm | Subject to turnover of the firm | Compulsory |
~ Conveyance/ Lease deed/Rent Agreement
~ NOC from Owner
~ Latest Utility Bill of Registered Office
~ PAN Card
~ Identity Proof ( Aadhar Card, Voter’s ID / Passport / Driving License )
~ Address Proof ( Latest Telephone Bill /Electricity Bill/ Bank Account Statement )
~ Photograph
Taxes Applicable
Taxes Applicable