TAX SAVING FOR FREELANCERS, PROFESSIONALS, TRADER & WEB BASED AGENCIES

Limited Liability Partnership vs Partnership

Limited Liability Partnership  vs Partnership

1)      Governing Law:  The Limited Liability Partnership Act, 2008 and various Rules made there under. The Indian Partnership Act, 1932. 

2)      Registration: Registration is Compulsory for Limited Liability Partnership Act (LLP), however for Partnership its optional.

3)      Separate Legal Entity: Limited Liability Partnership Act(LLP) is a separate legal entity, separate from its partners\ designated partners, however partnership is not separate legal entity from partners. Partners are collectively referred as firm.

4)      Perpetual succession: Limited Liability Partnership Act(LLP) has perpetual succession, whereas Partnership does not have perpetual succession.

5)      Formalities of Incorporation: Various documents / declarations in the e-forms are required to be filed with ROC along with filing fee for LLP incorporation, however Partnership deed along with form/ affidavit required to be filed with Registrar of firms along with requisite filing fees.

6)      Legal Proceeding: Limited Liability Partnership Act(LLP) can also sue and be sued as it’s a separate Legal entity, however only registered partnership can sue.

7)      Taxation: Limited Liability Partnership Act status in unclear, pending changes in income tax act, however Partnership is a separate taxable entity.

8)      Ownership of Assets: The Limited Liability Partnership Act has ownership of assets and Partners only have capital contribution in the Limited Liability Partnership  Partners have joint ownership of all the assets.

9)      Capital Contributions: Liability of partners is limited upto their capital contribution however in case a partners acts with an intention to conduct fraud, they are personally liable. Liability of partners is unlimited

10)  Dissolution by an act of partners / members / directors: Continuance of Limited Liability Partnership  is not affected by the acts of its Partners. Partnership contract can be put to an end by anyone of the members on happening of event specified in partnership act, 1932.

11)  Transfer ability of interest Rights/ interest of partners: Transfer ability of interest Rights/ interest of partners are transferable as per the provisions of LLP agreement. In the case of Partnership transfer ability of Interest subject to the mutual consent of all the members.

12)  Books of Accounts: Books of accounts must be prepared as specified in the LLP Act.For Partnership it’s not applicable.

13)  Audit of Accounts: As per the provisions of Limited Liability Partnership Act, accounts to be audited annually except for Limited Liability Partnership having turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year. However in Partnership, the Audit of accounts is as per the provisions of Income Tax Act.

14)  Annual Return: Annual Return is required to be filed with the ROC annually in the prescribed format and the same is not applicable for Partnership.

15)  Director Identification Number / Designated Partner Identification Number: Each Designated partner required to have a DPIN before being appointed as a Designated Partner of LLP. Whereas no such requirement is there for Partnership.

16)  Minimum Number of Member: Minimum two partners are required from LLP however in Partnership minimum two partner  are required.

17)  Maximum number of Member: No cap of maximum number of Partners in LLP, however in Partnership Maximum 10 for banking business and 20 for other business. 

18)  Meetings:  Meeting of the Designated Partners have to be held at specific time period as per the Provisions of LLP Act. Whereas no such requirement for Partnership.

19)  Minutes: Decisions taken in meetings must be recorded as minutes with in 30 days in case of LLP, whereas for Partnership it is not applicable.

Tax saving for Freelancers, Professionals, Trader and Web based agencies

10 mins of consultation. Place a request.

Some of the featured articles from our knowledge center

Business2 13a51fd54d37dfeead10bd04c34a46671e69097acf6d8002d2665eb06b5cf58f
What is the income tax payable on partnership firm

As per section 4 of partnership act 1932, partnership means the relationship between the person who are agreed to share the profits of business car...

Business3 1835184f1312bba0b871fddd223a24dd62299180ed03a78d9e4098813c851963
What is business income on presumptive basis under section 44ad and 44ada

As per section 44AA income Tax act 1962, every person who is carrying on business or profession is required to maintain books of accounts. However,...

Business1 8b8cee9b60a38e9df92fb5b897e7c09195532b3d70b7ec28803a600cf2ce60cd
What is GST and different types of GST forms

The Prime Minister approved “The constitution amendment bill for Goods and Service Tax”(GST) in the Parliament Session (Rajya Sabha on 3 August 201...