LLP is also a form of partnership, in which the liability of the partners is limited just as each partner will not be held responsible for the actions of other partners. Collective companies, on the other hand, bring unlimited liabilities to the partners concerned and are therefore jointly and severally liable for the debts.
Are you thinking of starting a business or want to expand the existing one? You have to make an important decision here, regarding the selection of the form of business organization. The most suitable form of business organization can be chosen by weighting the merits and demerits of each module according to your needs. Single owner, partnership, LLP, cooperative society, Joint Stock Company is some common forms.
Comparative chart
Basis for comparison
Association
Limited liability partnership (LLP)
Sense
The partnership refers to an agreement where two or more people agree to do business and share profits and losses with each other.
The Limited Liability Partnership is a form of business operation that combines the characteristics of a partnership and a corporate.
Ruled by
Indian Partnership Act, 1932
Limited Partnership Act of 2008
registration
Optional
Obligatory
Rental document
Partnership act
LLP agreement
Responsibility
Unlimited
Limited to capital injection, except in case of fraud.
Contractual capacity
He cannot enter into a contract in his name.
He can sue and be sued in his name.
Legal status
Partners are collectively known as companies, so there is no separate legal entity.
It has a separate legal status.
Company name
A few names
Name containing LLP as a suffix
Maximum partner
100 partners
Without limits
Property
It cannot be kept in the name of the company.
It can be kept in the name of the LLP.
Perpetual succession
No
Yup
Audit of accounts
Not required
Mandatory, only if turnover and capital contribution exceed 40 lakh and 25 lakh respectively.
Report
Partners are also agents of companies and other partners.
Partners are only LLP agents.
Definition of partnership
The term "partnership" is defined as the abstract legal relationship between people. It is the form of a commercial operation; in which the partners agree to pool their capital and resources, to manage an activity carried out by all partners or any partner on behalf of all partners and to share profits and losses according to the methods provided for in the agreement called "act partnership. "
In this agreement, the persons who entered into the agreement are called individual "partners". The material thing that symbolizes the joint entity for all partners is called "enterprise" and the name under which the activity is conducted is called "company name". Hence, partnership is the invisible link between partners while the company is the concrete form of partner.
Definition of Limited Liability Partnership (LLP)
Limited liability partnership, briefly known as LLP is described as a corporation created and registered under the Limited Liability Partnership Act, 2008. LLP is a commercial vehicle that integrates the benefits of a company's limited liability and the flexibility of partnership, that is to say for the organization their internal composition and functioning as a partnership.
LLP has a separate legal existence, distinct from its partners and has a perpetual succession. In the event of changes, in the partners, it will not affect the entity's rights, existence or liabilities. Any natural or legal person can become a partner in LLP, provided that he is able to become a partner.
Key differences between partnerships and limited liability partnerships (LLP)
The following points are essential regarding the difference between partnerships and limited liability companies (LLP):
1. Partnership is defined as an association of people who have come together to earn profits from businesses, undertaken by all partners or by any partner on behalf of all partners. The Limited Liability Partnership is a form of business operation that combines the characteristics of a partnership and a corporate.
2. The partnership is governed by the Indian Partnership Act of 1932. In contrast, Limited Liability Partnership Act, 2008 governs LLP in India.
3. The incorporation of the partnership is voluntary, while the registration of the LLP is mandatory.
4. The document that guides the partnership is called Partnership Deed. Contrary to the limited liability partnership, the LLP agreement is the rental document.
5. A partnership company cannot enter into a contract on its behalf. On the other hand, the LLP can sue and be sued in its name.
6. A partnership does not have a separate legal status apart from its partners, as the partners are individually known as partners and collectively known as companies. Unlike LLP, which is a separate legal entity?
7. The partner's liability is limited to the amount of capital contributed by them. On the contrary, the partners of a company have unlimited liability.
8. The partnership can be started with any name of choice. Instead, the limited liability company must use the word "LLP" at the end of its name.
9. Any two people can start a partnership or LLP, but the maximum number of partners in a partnership company is limited to 100 partners. In contrast, there is no maximum partner limit in LLP.
10. A limited liability company has a perpetual succession while a partnership can be dissolved at any time.
11. The maintenance and verification of accounting books is not mandatory for a partnership. In return, the LLP is required to keep and check the books if the turnover and capital contribution exceed 40 lakh and 25 lakh respectively.
12. The partnership company cannot hold property in its name. On the contrary, the LLP is authorized to hold the property in its name.
13. In a partnership, the partners act as agents of the partners and the firm. On the other hand, the partners are partner agents in the case of LLP.
Similarities
In both forms of business organization, the partners are not employees; rather they are agents.
Partners are entitled to remuneration, only if it is foreseen in the contract.
No partner is authorized to continue competing for work without the prior consent of other partners.
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The introduction of a new partner for the partnership can be done, only with the consent of the existing partners.
In the event of a partner's insolvency, he is not authorized to continue as a partner.
Conclusion
So with the above discussion, it is quite clear that both general partnership and limited liability partnership are the two varieties of partnership. In addition, an LLP is different from a partnership, in the way that partners are jointly or separately responsible for partner and company deeds, in a partnership. On the other hand, in the case of a limited liability company, the partners are not held responsible for the actions of other partners.