A Limited Liability Partnership (LLP) is a hybrid business structure that combines the flexibility of a partnership with the limited liability protection of a company. Partners in an LLP are not personally liable for the firm’s debts or the negligence of other partners.<\/p>\n
LLPs in India are governed by the Limited Liability Partnership Act, 2008. Unlike a traditional partnership, where all partners are personally liable for the firm’s obligations:<\/p>\n
– Each partner in an LLP is liable only for their own acts and the firm’s debts to the extent of their contribution
\n– No partner is liable for the negligence or wrongdoing of another partner
\n– The LLP itself (as a separate legal entity) is responsible for its obligations<\/p>\n
| Feature | Partnership | LLP | Pvt Ltd | LLPs are taxed similarly to partnership firms: 1. Minimum 2 designated partners (at least one must be an Indian resident)
\n|———|————|—–|——–|
\n| Liability | Unlimited | Limited | Limited |
\n| Separate legal entity | No | Yes | Yes |
\n| Compliance | Low | Moderate | High |
\n| Tax<\/a>ation | 30% flat | 30% flat | 22-30% |
\n| Audit requirement | Turnover based | Turnover\/contribution based | Mandatory |<\/p>\nTaxation of LLPs<\/h2>\n
\n– 30% flat tax on net profit<\/a>s
\n– Deductions for partner remuneration and interest (within limits)
\n– Partners’ share of profit is exempt in their individual hands<\/p>\nLLP Formation<\/h2>\n
\n2. Register with MCA (Ministry of Corporate Affairs) on MCA portal
\n3. LLP agreement defining rights and duties of partners
\n4. DPIN (Designated Partner Identification Number) for all designated partners<\/p>\nPractical Example<\/h2>\n