OVERVIEW
 

The Limited Liability Act (LLP Act) was passed in 2008. Its aim was to provide persons a corporate platform with features of Partnership Firm except that liability of each partner is limited to the extent of their shares, unlike a normal partnership firm in which each partner is exposed to unlimited liability irrespective of their share in partnership firm. To form an LLP there must be at least 2 people and there is no ceiling in the maximum number of partners. Further, it is not necessary that partners can be natural persons only; Body corporate may also become a partner in LLP. If in any circumstances, the number of partners is reduced to  1 (one) and it remains to one continuously till 6 months then LLP will lose its precious feature of Limited Liability and it will become Unlimited.  In LLP every partner is bound for his work only. In other words, negligence of one partner cannot cast liability on another partner. 

LLP has a separate legal entity i.e., the identity of its partner is separate from the identity LLP.   Due to the feature of limited liability, most of the businesses are attracted towards forming LLP.   Partners of LLP are known as “Designated Partners”. The Limited Liability Partnership is taxed in the same manner as general partnerships are taxed in India. However, as per the provision of Income Tax Law, no tax will be attracted if any general partnership is converted into a Limited Liability partnership. 

DIFFERENCE BETWEEN LIMITED LIABILITY PARTNERSHIP AND GENERAL PARTNERSHIP 

• LLP is regulated by the Limited Liability Partnership Act, 2018 on the other hand, the general partnership firm is regulated by the Indian Partnership Act, 1932.
• Limited Liability Partnership enjoys the benefit of separate legal entities while general partnership does not enjoy such benefits. 
• In general partnership firms there is a ceiling of maximum 50 partners but in the Limited Liability Partnership there are no such maximum limits. 
• Registration of Limited Liability firms is mandatory but in the case of general partnership registration is optional. 

DIFFERENCE BETWEEN LIMITED LIABILITY PARTNERSHIP AND PRIVATE LIMITED COMPANY

• LLP is regulated by the Limited Liability Partnership Act, 2018 on the other hand Private Limited Company is regulated by Companies Act, 2013. 
• In case of Private Limited Company, there should be at least 2 Directors which can be maximum to 15 while in the case of Limited Liability partnership, minimum designated partners should be at least 2 and no limit for maximum designated partners.
• In case of Private Limited Company, there should be at least 2 shareholders which can be maximum to 200 while in case of Limited Liability partnership, minimum designated partners should be at least 2 and no limit for maximum designated partners.
• Irrespective of turnover, statutory audit of a private limited company is mandatory while there is no such compulsion for Limited Liability Partnership unless its turnover during a Financial Year 40 lakh OR capital contribution of partners exceeds Rs. 25 lakh.  
• Both enjoy limited liability.
• Name of Private Limited Company is followed by the suffix “Private Limited” whereas the name of Limited Liability Partnership is followed by the suffix “LLP”.
• Compliances of private Limited company are High while compliances of Limited Liability partnership are comparatively Low.   

ADVANTAGE OF LIMITED LIABILITY PARTNERSHIP

• Liability of each partner is determined by execution of an instrument called Partnership Agreement in which liability share of each partner is exclusively mentioned. Partners are bound only to the extent of that share only. 
• Profit and loss sharing ratios are also fixed by mentioning the above partnership deed. Therefore, there is less litigation and smoothness in working. 
• It is not necessary that only natural people can become partners. Anybody corporate may also become a partner of LLP. But there is a condition that there must be at least ONE natural partner among all partners.
• In the capacity of a legal person, LLP can sue other persons and even it can be sued by another person also. 
• As in LLP, there is no compulsion for mandatory statutory audit unless its turnover during a Financial Year 40 lakh OR capital contribution of partners exceeds Rs. 25 lakh or it requires less compliances than private limited company, it is cost effective and very easy to maintain with no or low business.
• Cost of LLP formation is lower than private limited company incorporation.  

DOCUMENTS REQUIRED FOR LLP

1. ID Proof: All partners must have a valid self attached PAN card which is used as Identity Proof. 
2. Address Proof: Self attached address proof of all partners is required which includes A) Aadhar card, B) Voter ID card, C) Driving License, D) Passport (It must be taken care that details of address proof must be matched with PAN card like date of Birth, father’s name etc.)
3. Passport size photo of the member

4. Address Proof for registered office must be one of the following: 

   If premises is owned then, A) Copy of Rent Agreement (B) Latest Electricity Bill C) No objection Certificate from the landlord. 

   If the Property is owned then any latest electricity bill alongwith NOC in favour of Proposed LLP.