Advantages Of Limited Liability Partnership

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Advantage of LLPs.
The major advantages of Limited Liability Partnership are listed below:
a) Limited Liability: Unlike a general partnership, an llp is a separate legal entity from its partners. Thus the partners are not held liable for the liabilities of the llp. Any debts or liabilities against the company shall not be required to be paid at the cost of partner 's assets. Whereas in general partnership the partners share the profit as well as the losses of the partnership
b) Flexibility: LLP enjoy flexibility in maintaining its internal structure. Each can decide upon what amount of contribution they prefer to invest in the LLP. Partners can decide the terms and conditions to run the business. An LLP agreement is more flexible than a Company
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c) Easy to incorporate: Compared to incorporation of a company, an LLP is simple. The steps involved are somewhat similar to company incorporation, but the cost is less in case of Companies. The document work is also less in LLP formation as Compared to Companies.
d) No Audit requirement till a certain limit: Unlike Companies, an LLP is not required to get its accounts audited unless its capital exceeds Rs 25 lakh or turnover exceeds Rs 40 lakh.
e) No minimum capital required: LLp does not have a requirement of prescribed minimum capital. Partners can come together with any amount of investment in the form of money or kind and form an LLP.
IX. Disadvantages of LLP
The major Disadvantages of Limited Liability Partnership are listed below:
a) An LLP cannot raise funds from Public.
b) Any act of the partner without the other may bind the LLP.
c) Under some cases, liability may extend to personal assets of partners.
d) No separation of Management from owners.
e) LLP might not be a choice due to certain extraneous reasons. For example,, Department of Telecom (DOT) would approve the application for a leased line only for a company. Friends and relatives (Angel investors), and venture capitalists (VC) would be comfortable investing in a
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Although LLP Act has incorporated some provisions in tune with Partnership Act and Companies Act , but it differs in several aspects. Partnership Firm is not a legal entity like a company; it is a group of individual partners. In Partnership, Firm name is only a compendious name given to the partnership and the partners are real owners of assets and partnership firm is not a distinct legal entity. But, LLP per se is a body corporate formed and incorporated under this Act and legal entity separate from that of its partners. Any change in the partners of a LLP shall not affect its existence, rights or liabilities. So, an LLP shall have perpetual

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