Partnership Firm v/s LLP (Limited Liability Partnership)

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Hiral Vakil

LLP
Start & Run Business

One of the common questions a businessman would ask is whether to form a Partnership Firm or a Limited Liability Partnership (LLP). Technically, an LLP has more advantages than a partnership firm. We could say that a Limited Liability Partnership combines some of the advantages of a Private Limited Company with those of a simple Partnership Firm. A business can register an LLP on the MCA Portal.

Limited Liability Partnership (LLP) Registration
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Limited Liability Partnership (LLP) Registration
Need the help of an expert for LLP Registration? We can help you out!
[Rated 4.8 stars by customers like you]

Features of Partnership Firm v/s LLP

Attributes Partnership Firm Limited Liability Partnership
Separate Legal Entity Not a separate legal entity Separate legal entity different from its partners
Statute governing registration Partnership Act, 1932 Limited Liability Partnership Act, 2008
Maximum Number of partners Partnership Firm can have a maximum of 20 partners LLP can have unlimited partners
Registration The registration is not mandatory and can be voluntarily done with Registrar of Firms LLP Registration is mandatory and possible online with the Ministry of Corporate Affairs (MCA)
Liability of Partners The partner has unlimited liability. Even the personal assets of the partners can be annexed to pay off the debts of the partnership firm. The liability of partner is Limited. Only the amount contributed by the partners to the firm can be used to pay off the debts of the partnership firm.
External Investment Difficult to obtain Easily Available
Credibility Low High
Audit of Accounts Tax Audit as per provisions of Income Tax Act, 1961 is applicable If Turnover exceeds Rs 40 Lakhs or contribution exceeds Rs 25 Lakhs, a statutory audit is applicable
Statutory Compliance Partnership Firm need not file an annual return LLP must finish annual compliances by filing forms on MCA Portal

FAQs

Can an existing partnership firm be converted to LLP?

Yes.we can convert an existing partnership firm into an LLP. You may simply comply with the provisions of the LLP Act. and fill Form 17 (MCA Form) along with Form 2 (MCA Form) for converting Partnership firm into LLP.

Can an existing company be converted to LLP?

Yes. It is possible to can convert an existing company (Private or unlisted public company)into an LLP and take advantage of Limited Liablity . You may simply comply with the provision of the LLP Act and fill Form 17 (MCA Form) along with Form 2 (MCA Form) for converting your Private/public company into LLP.

Can a listed company be converted to LLP?

No, only private/unlisted public company or a partnership firm can convert into an LLP

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