What is a Limited Liability Partnership (LLP)?

A Limited Liability Partnership, popularly known as LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.

Advantages of LLP:

An LLP combines the advantages of a corporation with those of a traditional partnership:

• Separate Legal Entity: Legally, an LLP is a separate entity from its partners. It can own assets, enter into contracts, and can be sued in its own name. Moreover, one partner cannot be held responsible for the act or omission of another partner.
• Limited Liability: The liability of partners in an LLP is limited to the extent of the amount contributed by them. Personal assets of partners cannot be used to pay off the business debts except in some exceptional circumstances like commission of fraud by a partner.
• No Limit on Number of Partners: Any LLP can have any number of partners it wishes to have. LLPs are usually owned and managed by partners unlike corporations where directors are appointed to manage the company.
• Ability to Purchase Property: Since an LLP is a separate entity from its owners, it can purchase and own property in its own name unlike in case of a traditional partnership, where property must be purchased in the name of individual partners.
• Flexible Agreement: The partners of an LLP can draft the partnership agreement based on their mutual understanding and requirements. The agreement should define the rights and duties of the partners.

Other Important Advantages:

• Easy to establish
• Low cost of Formation
• Less Compliance
• Renowned and accepted form of business worldwide
• No requirement of any minimum capital contribution
• Easy transfer of Ownership