LLP vs Partnership Firm in India
Limited Liability Partnership
Limited Liability Partnership newly, an established concept has been introduced in India by way of Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to incorporate, maintain and no secretarial norms needs to be done. Benefits of LLP over Partnership Firm is that partners are not personally liable for the liabilities of the Partnership and the liability of a Partner is limited to the amount of his/her capital contribution to the LLP that why LLP is considered to be separate legal entities and the LLP has a perpetual existence.
The partnership is governed by Indian Partnership Act, 1932. It is basically a relation between two or more persons who have agreed to share the profits of a Business carried on by all or any of them acting for all. The partners can enter into a verbal or written agreement.The partners provide the necessary capital, run the business jointly and share the responsibility.The Registration of partnership firm is not compulsory.
Difference between Partnership and LLP Company
The major difference between partnership and LLP is as follows:
- LLP is governed by Limited Liability Act, 2008 In India.
- The liability of Partners is limited to the extent of their contribution in LLP.
- LLP requires minimum 2 partners and there is no limit on maximum partners.
- An LLP can be formed with Less Capital.
- LLP is a separate legal identity and it can hold assets in its name.
- In case of LLP, it is mandatory to file an annual return to Ministry of Corporate Affairs.
- Procedure to form A LLP In India is Obtain DSC (Digital Signature Certificate), Obtain DPIN (Designated Partner Identification Number), Name Approval, Filing for Incorporation and File LLP Agreement.
- The existence and operations of LLP are not affected by the change in the Partners.
- The taxation aspects are governed by Income Tax Act, 1961.
- An LLP can be closed Voluntarily or by order of National Company Law Tribunal or by meeting certain conditions and following the procedures of LLP Act 2008.
- The Partnership is governed by Indian Partnership Act, 1932 In India.
- Partners are personally liable for the unlimited amount of liabilities of the partnership.
- There is no limit for Capital.
- Partnership has no separate identity
- The procedure of opening partnership firm in India is Preparation of Partnership Agreement, Stamping and Notarization of the partnership agreement and Registration of Agreement with the Registrar of Firms.
- There are no requirements for annual return filing in case of a partnership.
- The Taxation Aspect is based on the total income of the Proprietor.
- The existence and operation of the partnership are affected by the change in partners.
- The Partnership can be closed By agreement, mutual consent, insolvency, certain contingencies, and by court order.
By now I hope we have managed to give you required information on LLP and Partnership firms. If you wish to open or register LLP or Partnership firm, Then please visit our website today to get solutions for all queries related to LLP and partnership firm anywhere in India.