Compare limited liability companies and partnership.

Banking & FinanceManagementCompanies/Organisations

The major differences between limited liability companies and partnership are as follows −

Limited liability companiesPartnerships
  • 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.

raja
Published on 27-Jul-2020 11:36:26
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