LIMITED LIABILITY PARTNERSHIP
LLP is a corporate business vehicle that enables professional expertise and entreprenuerial initiative to combine and operate in flexible, innovative and efficient manner provind benefits pf limited liability while allowing its members the flexibilty for organising their internal structure as a partnership.
Feature of Limited Liability Partnership:
- The LLP has separate legal entity.
- Minimum 2 partners are required to form a LLP.
- No requirement of minimum capital contribution.
- The LLP Act does not restrict the benefits of LLP structure to certain classes of professionals only and would be available for use by any enterprise.
Benefits of forming Limited Liability Partnership:
- The liability of each partner is limited to share as written in the agreement filed at the time of creation of LLP as compared to Partnership Firm which have unlimited liability.
- It has low cost of formation and is easy to form.
- The partners are not liable for the acts of each other and can be held liable only for their own acts as compared to Partnership Firm wherein they can be held liable for the acts of their partners as well.
- Less restrictions and compliance are enforced on LLP by the Govt. as compared to restrictions enforced on a Company.
- As a Legal Person, a LLP can sue in its name and can be sued by others. The partners are not liable to be sued for the dues against the LLP.
Disadvantages of forming LLP:
The only disadvantage of forming LLP is that it cannot come out with its IPO and raise money from the public which a company form of organisation can easily do.