Business Formation, LLP

3 Aspects to keep in mind before registering LLP

Entrepreneurs, in general like flexibility or rather I should say a mix of that and a mix of this, and while choosing an entity type to register their business expectations is no different. Today we will be looking into one such thing, choosing LLP as an entity for registering one’s business.  The gist of this blog will be around the 3 aspects of LLP an entrepreneur should consider keeping in mind before registering one.


LLP is, again, a mix and match of two entity types – Company and Partnership. To talk about the major distinguishing features or to put it classy manner ‘The USPs of LLP’ – all partners have a form of limited liability for each individual’s protection within the partnership; partners have the right to manage the business directly; limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.


Aspect #1 – Characteristics of LLP

  • LLP has perpetual succession separate from its partners
  • Duties and rights of partners strictly governed by the LLP Deed Agreement.
  • In absence of LLP Deed Agreement, the duties and rights will be governed by the LLP Act.
  • Liability of the partners limited to their agreed contribution in the LLP
  • No partner would be liable for actions of other partners.
  • If LLP and the partners are found to have acted with an intent to defraud creditors, both wil be facing unlimited for all debts or other liabilities.
  • No limits to the number of partners of an LLP



Aspect #2 – Advantages of LLP

  • Separate legal entity
  • Easy to establish
  • Minimal legal and procedural requirements
  • Perpetual existence of LLP
  • No minimum capital limit
  • No maximum number of partners limit
  • LLP and partners are separate from each other
  • Easy to wind up
  • No requirement to maintain statutory records except Books of Accounts



Aspect #3 –Disadvantages of LLP

  • LLP cannot raise funds from public
  • No separation of management from owners
  • RoC returns filing penalty is higher



Difference between LLP and other entities



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