What is Limited Liability Partnership ( LLP ) ?

LLP stands for Limited Liability Partnership, which is a type of business structure that combines the features of a partnership firm and a limited liability company. In an LLP, partners have limited liability, which means they are not personally responsible for the debts and obligations of the business beyond their capital contribution. LLPs are governed by the Limited Liability Partnership Act, 2008, and offer several advantages, including flexibility in management, less compliance requirements, and tax benefits. LLPs are ideal for professional services firms such as lawyers, accountants, and consultants. Unlike a traditional partnership firm, an LLP has perpetual succession and can continue to exist even after the death or exit of a partner.

• Advantages :

  1. Limited liability: The biggest advantage of LLP is that it offers limited liability protection to its partners, which means they are not personally liable for the debts and obligations of the business.

  2. Flexibility in management: LLP offers flexibility in management, allowing partners to structure the management of the firm as per their convenience and agreement.

  3. Less compliance requirements: LLP has relatively fewer compliance requirements compared to other forms of business structures, making it easier for partners to manage and operate the business.

  4. Tax benefits: LLP enjoys tax benefits, as profits and losses are taxed at the individual partner's income tax rate, rather than the entity level.

  5. Perpetual succession: LLP has perpetual succession, which means that the business can continue to exist even after the death or exit of a partner, ensuring the continuity of the business.