Compare limited liability companies and partnership.
The major differences between limited liability companies and partnership are as follows −
|Limited liability companies||Partnerships|
Offers features of both partnership and a body corporate.
It is governed by Limited Liability Partnership Act, 2008.
Registration is mandatory with the ministry of corporate affairs.
Charter document is LLP agreement.
Liability is limited to capital contribution (except for fraud cases).
Can be sued/sue in its name
They have separate legal status.
Name of the firm contains LLP in its suffix.
No limit for maximum partners
There is perpetual succession.
Audit of account is mandatory, only if turnover is above 40 lakhs and capital is above 25 lakhs.
LLP can’t be converted to partnership.
Cost of formation is statutory filling fees.
Foreign people can be a partner.
Designated partners are required to manage day to day administration.
May decide for maintenance of minutes.
Annual filling is required.
Will have high creditworthiness (comparatively).
It is an arrangement made by two or more people to do business and share profit/loss mutually.
It is governed by Indian Partnership Act, 1932.
registration is optional with the register of firms.
Charter document is partnership deed.
Liability is unlimited.
Can’t enter its name in contracts.
They don’t have separate legal status.
Can have any name.
Maximum partners could be 100
Property can’t be held in its name.
No perpetual succession
Audit of accounts in not mandatory.
Partnership can be converted to LLP.
No cost/negligible cost of formation.
Foreign people can’t form partnership with Indian firms.
Designated people are not required to manage day to day administration.
No concept of maintenance of minutes.
No annual filling is required.
Creditworthiness is dependent on firm’s goodwill and its partners.
Published on 27-Jul-2020 08:06:26