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LLP v/s other Forms of Busniess

LLP v/s other Forms of Busniess

Comparison Between LLP and other Forms of Business

Category LLP Partnership Firm Company
Prevailing Law Limited Liability Partnership are prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made there under Partnership is prevailed by ‘The Indian Partnership Act, 1932’ and various Rules made there under Companies are prevailed by ‘Companies Act, 2013’
Registration Registration with Registrar of LLP required Registration is optional Registration with Registrar of Companies required.
Name of Entity Name to contain 'Limited Liability Partnership' or 'LLP' as suffix. Any name as per choice Name to contain 'Limited' in case of Public Company or 'Private Limited' in case of Private Company as suffix
Cost of Formation The cost of Formation is statutory filling fees, comparatively lesser than the cost of formation of Company The Cost of Formation is negligible Minimum Statutory fee for incorporation of Private Company is Rs.6,000/- and minimum Statutory fee for incorporation of Public Company is Rs. 19,000/-
Charter Document LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP. Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners Memorandum and Article of Association is the charter of the company which defines its scope of operation.
Formalities of Incorporation Various eforms are filled with Registrar of LLP with prescribed fees In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee Various eforms along the Memorandum & Articles of Association are filled with Registrar of Companies with prescribed fees
Time line It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DIN) It will take 7 days (approx.) to incorporate It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DIN)
Legal Proceedings A LLP is a legal entity which can sue and be sued Only registered partnership can sue third party A company is a legal entity which can sue and be sued
Number of Members Minimum 2 partners and their is no limitation of maximum number of partners Minimum 2 and Maximum 20 2 to 200 members in case of Private Company and Minimum 7 members in case of Public Company.
Rights / Duties / obligation of the Partners / Managing Partners / Directors Rights / Duties / obligation of the partners are governed by LLP Agreement Rights / Duties / obligation of the partners are governed by Partnership Deed. Rights / Duties / obligation of the directors are governed by AOA and resolution passed by shareholders or directors.
Liability of Partners/Members Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner. Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets. Generally limited to the amount required to be paid up on each share.
Transfer / Inheritance of Rights Regulations relating to transfer are governed by the LLP Agreement . Not transferable. In case of death the legal heir receives the financial value of share. Ownership is easily transferable
Annual Filing Annual Statement of accounts and Solvency & Annual Return is required to be filed with Registrar of Companies every year No return is required to be filed with Registrar of Firms Annual Financial Statement and Annual Return is required to be filed with the Registrar of Companies every year.
Audit of accounts All LLP except for those having turnover less than Rs.60 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008. Partnership firms are only required to have tax audit of their accounts as per section 44AB of Income Tax Act, 1961 Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 2013 and as per section 44AB of Income Tax Act, 1961 as well.