LLP vs Partnership
A Limited Liability Partnership and a partnership are both forms of business entities that involve two or more individuals or entities coming together to carry out a business venture. However, there are some key differences between an LLP and a partnership as follow:
1.Liability:
In a partnership, the partners have unlimited liability. Which means they are personally liable for the debts and obligations of the partnership. In contrast, an LLP provides limited liability to its partners, where their liability is limited to the extent of their capital contribution and they are not personally liable for the LLP’s debts and liabilities.
2.Legal Status:
A partnership does not possess an independent legal entity distinct from its. The partners themselves consider the owners of the business, and the partnership generally do not recognize as a distinct legal entity. In contrast, an LLP stands as an independent legal entity distinct from its partners. It has its own legal existence, can own property, enter into contracts, and sue in its own name.
3.Registration and Compliance:
In most jurisdictions, partnerships do not require formal registration or compliance with specific regulations. They can operate based on an oral or written agreement among the partners. In contrast, an LLP require to register with the appropriate regulatory authority, and there are usually specific regulations and compliance requirements that LLPs need to adhere to.
4.Governance and Management:
Partnerships are generally managed by the partners collectively, and the decision-making process can vary based on the partnership agreement. In an LLP, the management and governance structure can be more flexible. The partners can choose to actively participate in the management or designate certain partners or external professionals to manage the affairs of the LLP.
To visit https://www.mca.gov.in
5.Continuity and Succession:
In a partnership, the business dissolves upon the death, retirement, or withdrawal of a partner, unless otherwise specified in the partnership agreement. The LLP can continue its existence even if there are changes in the partners. The LLP could dissolve or reconstitute as per the terms outlined in the LLP agreement.
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