Limited Liability Partnership

We always say why work for others when we can for work for ourselves. But then we are worried of losing everything. As on starting a sole proprietary firm or a partnership firm there is no limit to your liability. To avoid this you can go for a limited liability partnership, LLP in short.

LLP is a firm which enables persons to take initiative and also gives it operational flexibility like a sole proprietary or a partnership firm with the benefits of limited liability. It is a legal form, which was available worldwide and now this legal form is available on India as well. It is a combination of Partnership firm and a company with limited liability.

LLP is a separate legal entity separate from its partners, can own assets in its name, where the partners have the right to manage the business as they want to. Unlike a partnership where one partner is responsible for the acts done by another, in an LLP it is limited to the contribution done by the partner to the LLP.

A LLP is advantageous because of comparatively lower cost of formation, lesser compliance requirements, easy to manage and run and also easy to wind-up and dissolve and no requirement of minimum capital contributions unlike a company. But the restriction is an LLP cannot raise money from the public.

One of the biggest advantages is it can continue its existence irrespective of change of partners or succession unlike a partnership. Also a company can become a partner in a LLP, which is not possible in a partnership; there you have to form a joint venture for a limited objective.

So why not start looking at starting a business as a limited liability partnership?