In general law a LLP is regarded as a body corporate. The Limited Liability Partnership (LLP) is essentially a general partnership in form, with one important distinction that the liability of partner is limited to the extent of the capital contributed by him/her in the LLP. LLP is managed as per LLP agreement. LLP partners do not receive dividend, but are entitled to get income/profits as per the agreed formula described in the LLP Agreement.
1. There is no requirement of minimum capital contribution.
2. In LLP, minimum of two partners are required to form a LLP.
3. There is no restriction on the maximum no. of partners.
4. Liability of partner is limited to the extent of the agreed contribution in the LLP agreement.
1. Limited Liability: The Liability of each partner is limited to his share as written in the LLP Agreement. If an LLP becomes insolvent and is wound up, only the assets of the LLP are used to clear its debts.
2. Audit not required: Audit is not required for Limited Liability Partnership unless capital exceeding Rs. 25 lakh or turnover exceeding Rs. 60 lakh.
3. Tax Treatment: LLP’s tax payment are lower than that of Company. They are taxed like general partnership firm at the effective rate of 30.9%. Surcharge is not applicable on the limited liability partnership.
4. Capital Contribution: There is no requirement of minimum capital contribution in case limited liability Partnership.
5. Uninterrupted Existence: A LLP being a separate legal entity is unaffected by the death or departure of any partner, but continues to be in existence with the change in partnership.