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Partnership v. Limited Liability Partnership (LLP)


A Partnership is a form of business operation wherein the partners agree to pool their capital and resources, to run a business carried on by all the partners or any one partner on behalf of all the partners and share profits and losses in the manner prescribed in the agreement called ‘partnership deed’.

LLP is also a form of partnership, where the liability of partners is limited and a partner will not be held liable for the acts of other partners. LLP is a business vehicle that integrates the advantages of limited liability of a company and the flexibility of a partnership.

This chart illustrates the differences between the two: 

Features


Partnership


LLP


Governing Law


Partnership Act, 1932


LLP Act, 2008



Registration


Optional


Mandatory



Charter Document


Partnership Deed


LLP Agreement


Liability





Unlimited




Limited to capital contribution(except in the case of fraud)



Perpetual Succession


No


Yes



Legal Status



Firm(not a separate legal entity)



LLP(separate legal entity)



Property



Cannot be held in the name of  Firm


Can be held in the name of LLP

Audit of Accounts

Not mandatory

Mandatory if turnover and capital contribution exceeds prescribed limits(40 lakhs and 25 lakhs respectively)


Relationship


Partners are agents of Firm and other partners

Partners are agents of LLP only