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What is a Limited Liability Partnership ?
In general partnership, all the partners have equal responsibility for the business and unlimited liability for the financial obligations of the business. We can simply conclude for the above statement that in this kind of partnership a person will not only enjoy the benefits but also detriments of the business. A Limited Liability Partnership (LLP) is simply a partnership type where some or all partners having limited liabilities work together. In such partnership, each partner is not responsible or liable for another partner’s misconduct or negligence. As the name suggests Limited Liability that means it allows at least one owner limited personal liability for the business’ financial obligations, such as debts and court judgments. Each partner who decided to get into Limited Liability Partnership works or contributes to the everyday business operations but each partner enjoys limited personal liability for the other partners’ acts.
|Advantages of LLP||Disadvantages of LLP|
|Unlike internal complex structure of a company, it is more flexible to organise the internal structure of a company.||One cannot raise money raise money from public which a company forms easily do.|
|All partners are protected by some form of liability protection, but this also means each partner gets a say in how the business is ran.||Any act of the partner without the other partner may bind the LLP.|
|LLP ownership can be easily transferred to another person. LLP is separate from its managing partners, so if managing partners are changed, the ownership of LP can be changed.||Private limited is preferred over Limited Liability partnership.|
|An LLP can acquire, own and enjoy property in its own name. Partners cannot make any claim upon the property of the LLP so long as the LLP is going concern as it is entirely distinct from its partners.|
|One of the biggest advantages a LLP holds, the status of being legally responsible only to a limited amount for debts of a LLP. The liability of the members in respect of the LLP’s debts is limited in such partnerships.|
|Without going through any corporation formalities you can still have benefits similar to a corporation.|