LLP Vs Partnership Firm



When starting a business, choosing the right legal structure is difficult. LLPs and partnerships are two popular options, each with its own set of attributes and implications. Understanding these differences is essential for entrepreneurs, professionals, and investors alike.

Definition Of LLP

A limited liability partnership, commonly known as an LLP, is a business structure that combines elements of partnerships and corporations. It provides a flexible framework for professionals and service-based businesses. The LLP is a separate legal entity. The LLP itself will be liable for the full extent of its assets, and the liability of the partners will be limited.

Definition Of Partnership Firm

A partnership is a traditional form of business structure where two or more individuals collaborate and share profits, losses, and responsibilities. A partnership is a contract wherein parties, also referred to as business partners, decide to work together to further their shared objectives. A partnership may have one or more individuals, corporations, nonprofits, educational institutions, governmental bodies, or other entities as partners. Organizations may collaborate to broaden their reach and improve the chances that each will succeed in reaching its goals. A partnership might issue and hold stock, or it might just be bound by a contract.

Differences Between LLP And Partnership Firm

 

 

aspect

Limited Liability Partnership(LLP)

Partnership firm

1

Regulating act:

The limited liability partnership act,2008

The Indian partnership act, of 1932

2

Structure

Must have at least two designated partners

Comprises two or more partners

3

Taxation

Taxed as a separate legal entity

Partners taxed individually

4

Common seal

It may have its common seal as its official signature.

There is no such concept in partnership

5

Annual Filing

Annual filing of financial statements required

No requirement for annual filing

6

Continuity

Continuity beyond the death or departure of a member

Dissolution upon death or departure of a partner

For more information go on: online chartered

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