What is an LLP and How is it Different?
A Limited Liability Partnership (LLP) is a hybrid business structure that combines the flexibility of a traditional partnership with the limited liability protection of a company. Governed by the Limited Liability Partnership Act 2008, an LLP is a body corporate with a separate legal identity from its partners.
Unlike a general partnership where partners have unlimited personal liability, in an LLP each partner's liability is limited to their agreed contribution amount. This makes LLP particularly popular among professional service firms.
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Get Free ConsultationLLP vs Private Limited Company: Key Differences
| Factor | LLP | Private Limited Company |
|---|---|---|
| Compliance Level | Lower (Form 8 + Form 11 annually) | Higher (AOC-4, MGT-7, AGM, board meetings) |
| Audit Requirement | Only if turnover > ₹40L or capital > ₹25L | Mandatory statutory audit every year |
| Equity Funding | Cannot issue equity shares to investors | Can issue shares to investors easily |
| Taxation | Partners taxed at individual rates (no DDT) | Corporate tax at 22% + DDT on dividends |
| Management | Governed by flexible LLP Agreement | Governed by MOA, AOA and Companies Act |
| Best For | Professional firms, consultants, agencies | Product startups, investor-backed businesses |
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