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LLP which stands for Limited Liability Partnership, provides the advantages of a Private Limited Company and an LLP can be registered with a minimum of two partners or more. The LLP agreement states the rights, duties, and obligations of the Partners. In an LLP one partner is not responsible for the misconduct and negligence of the other partner. The partners are responsible for compliance and all the provisions that are specified in the LLP agreement.
An LLP can sue and be sued in its own name, such that it is a The contracts are signed in the name of the LLP, which helps to gain the trust of various stakeholders and gives the customers and suppliers a sense of confidence in the business.
This means that they are liable to pay only the amount of contributions made by them and are not personally liable for any loss in the business.
The cost of forming an LLP is low compared to the cost of incorporating a public or private limited company. The compliances to be followed by the LLP is also low. The LLP needs to file only two statements annually, i.e. Annual Return and a Statement of Accounts and Solvency.
Features | Proprietorship | OPC | |||
Number of Person | One person | Two or more | Two or more | Two or more | One person and one nominee |
Designation | Proprietor | Partner | Designated Partner | Director | Director |
Name | As it is | As it is | Ends with LLP | Ends with Private Limited | Ends with OPC Private Limited |
Registration | Shops and Establishment | Registrar of Firms | Registrar of Companies | Registrar of Companies | Registrar of Companies |
Capital | No Minimum | No Minimum | No Minimum | No Minimum | No Minimum |
Legal Status | Not a Separate Entity | Not a Separate Entity | Separate Entity | Separate Entity | Separate Entity |
Liability | Unlimited | Unlimited | Limited | Limited | Limited |
Audit | If turnover above 1 crore | If turnover above 1 crore | If contribution above 25 lakhs or turnover above 40 lakhs | Compulsory | Compulsory |
Compliance | Least | More than proprietorship | More than partnership, less than company | Most | Less than Company |
Filing of resolution | No | No | No | Yes | Yes |
Taxability | Less | Less | 30%+surcharge +cess | 30%+surcharge +cess Distribution of profits taxed | Comparatively More |
Meetings | Not mandatory | Not mandatory | Not mandatory | Mandatory | Mandatory |
Credibility | Less | Less | More than Partnership less than company | High | High |
Dissolution | Easy | Easy | Less complex than company | Complex | Complex |
Governance | Not by any law as not a separate entity | Partnership Act, 1932 | LLP Act, 2008 | Companies Act, 2013 | Companies Act, 2013 |
Agency | No | Partners agent of each other | Partners not agent of each other | Members not agent of each other | Members not agent of each other |
Property | Belongs to the Proprietor | Belongs to its partners jointly | Separate from its partners | Separate from its members | Separate from its members |
Transfer of Share | Not possible | Not possible | Possible | Possible | Possible |
Number of Members | One | 2 to 20 | Min- 2 | Min- 2 | One |
Duration | Till death or insolvency or retirement of proprietor | Till death or insolvency or retirement of partner | Perpetual Succession | Perpetual Succession | Perpetual Succession |
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