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Difference between LLP and Partnership

Created on 20 Aug 2018

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Updated on 19 Oct 2019

A limited liability partnership, as its name suggests is a business organization where though the partners bring investment in the firm, they have a limited liability towards the dues of the partnership.

The Partnership Act, 1932 defines partnership as: "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Difference between LLP & Partnership

LLP

Partnership

  1. A limited liability partnership is a combination of a company and a partnership, where the partners have a limited liability towards the debts and obligations of the partnership.
  1. A partnership is an arrangement where two or more individuals or partners come together to carry on business and share their profits and losses in the ration agreed upon.
  1. A limited liability partnership is governed by the Limited Liability Partnership Act, 2008.
  1. A partnership is governed by the Partnership Act, 1932.
  1. LLP is a separate legal entity and therefore, can be sued or it can sue others without involving the partners.
  1. A Partnership firm is not distinct from several persons who compose it.
  1. The partners of an LLP would have limited liability.
  1. Whereas, partners of a firm would have unlimited liability.
  1. The retirement or death of a partner would not dissolve the LLP.
  1. The death or retirement of a partner would dissolve the partnership firm.
  1. LLP is formed by an incorporation document and an LLP agreement, thus, giving it legality.
  1. A partnership can be formed either orally or by a deed of agreement whether registered or not.
  1. LLP can have more than that number since no upper limit has been laid down by the Act.
  1. A registered or unregistered partnership cannot have more than 20 partners.
  1. The registration of a limited liability partnership is done with the Ministry of Corporate Affairs.
  1. A partnership is registered with the Registrar of firms.
  1. A limited liability partnership can hold property in its own name.
  1. A partnership cannot hold property in its own name.
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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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