Partnership Firm come under the Indian Partnership Act, 1932, Section 4 and is defined as “the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all”. People who own the Partnership Firm is called partners individually and together firm.
Online LLP Registration in India or Limited Liability Partnership Registration in India is one of the new concept in which partners are not liable for the actions of other or co-partners, their liability is limited. It was introduced under Limited Liability Partnership Act, 2008.
Following are the pros & cons of Limited Liability Partnership Registration in India over Partnership Firm:
- LLP is considered separate legal entity and can hold assets in its name but that is not the same for Partnership Firm. The status of Partnership Firm is not separate from its Partners.
- As the name suggests of LLP, liability of the Partners extent to contribution they make and they can’t be held liable for the actions of other partners. In Partnership Firm other partners are held liable for actions of active Partners.
- Though you need minimum two partners for incorporation of LLP but there is no limit for maximum number but that’s not the case in Partnership Firm the limit is 50 and if this limit exceeds it is declared as illegal association.
- Limited Liability Partnership is not affected by the death or removal or change in the Partners but if the same happens in the Partnership Firm the firm dissolves.
- The name of LLP is unique and not similar to any other company whereas there is no such restriction in Partnership Firm the same name can be used.
- The central Registration with MCA allows availability of Documents to Public except the Agreement between Partners. Also, one can see the last Balance sheet filed with MCA in the Master data of the entity which creates high creditability and reliability among the other parties to the LLP on the other side no data of the partnership firm can be seen or disposed on any public platform.
- Registration of LLP is mandatory but Partnership Firm can be registered as well as unregistered.
- Statutory Compliances in case of LLP are in addition to compliance under Income Tax Act, as the LLP Act mandates the same. These compliances ensure transparency of operations and financials of the entity. There are no additional compliances except what is mentioned in Income Tax Act for Partnership Firm
- Even though the compliances of LLP are limited failure to comply results into heavy penalties.
- LLPs cannot get its shares listed in any stock exchange through initial public offerings. With this restriction, limited liability partnerships may find it difficult to attract outside investors to buy the shares.
- LLP cannot raise funds from public or take any commercial loans & borrowing from foreign partners/investors.
Limited Liability Partnership being a fairly new concept is one of the most advantageous options in India. At Company Vakil we do offer the services for the Online LLP Registration in India with the best outcomes.