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Meaning
A corporate business vehicle that enables professional expertise and entrepreneurial
initiative to combine and operate in flexible, innovative and efficient manner, providing
benefits of limited liability while allowing its members the flexibility for organizing their
internal structure as a partnership.

In short LLP is a business structure that has elements of both partnership and
corporate firms but combines the limited liability benefits of a company with the
flexibility of a partnership.

LLP has a separate legal entity, liable to the full extent of its assets, the liability of the
partners would be limited to their agreed contribution in the LLP. Further, no partner
would be liable on account of the independent or un-authorized actions of other
partners, thus allowing individual partners to be shielded from joint liability created by
another partners wrongful business decisions or misconduct.





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Advantage
Renowned and accepted form of business
Low cost of Formation.
Easy to establish.
Easy to manage & run.
No requirement of any minimum capital contribution.
No restrictions as to maximum number of partners.
LLP & its partners are distinct from each other.
Partners are not liable for Act of partners.
Audit requirement only in case of contributions exceeding Rs. 25 lakh or
turnover exceeding Rs. 40 lakh.
No exposure to personal assets of the partners except in case of fraud.
Less requirement as to maintenance of statutory records.
Less Government Intervention.
Easy to dissolve or wind-up.
Professionals can form Multi-disciplinary Professional LLP, which was not
allowed earlier.
No requirement as to Minimum Alternate Tax.

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Conditions3 Partnership Company LLP
Prevailing Law Partnership is prevailed by
The Indian Partnership Act,
1932 and various Rules
made there under
Companies are prevailed by
Companies Act, 1956
Limited Liability Partnership
are prevailed by The
Limited Liability Partnership
Act, 2008 and various
Rules made there under
Registration Registration is optional Registration with Registrar
of LLP required.
Registration with Registrar
of LLP required.
Distinct entity Not a separate legal entity Is a separate legal entity
under the Companies Act,
1956.
Is a separate legal entity
under the Limited Liability
Partnership Act, 2008.
Name of Entity Any name as per choice Name to contain 'Limited' in
case of Public Company or
'Private Limited' in case of
Private Company as suffix.
Name to contain 'Limited
Liability Partnership' or 'LLP'
as suffix.
Perpetual Succession It does not have perpetual
succession as this depends
upon the will of partners
It has perpetual succession
and members may come
and go.
It has perpetual succession
and partners may come and
go
Comparison of LLP with different business Models
3 By Rajiv Shah - Cell 9824031476
Conditions4 Partnership Company LLP
Legal Proceedings Only registered partnership
can sue third party
A company is a legal entity
which can sue and be sued
A LLP is a legal entity can
sue and be sued
Foreign Participation Foreign Nationals can not
form Partnership Firm in
India
Foreign Nationals can be a
member in a Company.
Foreign Nationals can be a
Partner in a LLP.
Number of Members Minimum 2 and Maximum 20 2 to 50 members in case of
Private Company and
Minimum 7 members in case
of Public Company.
Minimum 2 partners and their
is no limitation of maximum
number of partners.
Ownership of Assets Partners have joint
ownership of all the assets
belonging to partnership firm
The company independent of
the members has ownership
of assets
The LLP independent of the
partners has ownership of
assets
Liability of
Partners/Members
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.
Limited, to the extent their
contribution towards LLP,
except in case of intentional
fraud or wrongful act of
omission or commission by
the partner.
Tax Liability Income of Partnership is
taxed at a Flat rate of 30%
plus education cess as
applicable.
Income of Company is Taxed
at a Flat rate of 30% Plus
surcharge as applicable.
Income of LLP is taxed at a
Flat rate of 30% plus
education cess as applicable.
Comparison of LLP with different business Models
4 By Rajiv Shah - Cell 9824031476
Conditions5 Partnership Company LLP
Transfer / Inheritance
of Rights
Not transferable. In case of
death the legal heir receives
the financial value of share.
Ownership is easily
transferable.
Regulations relating to
transfer are governed by the
LLP Agreement .
Transfer of Share /
Partnership rights in
case of death
In case of death of a partner,
the legal heirs have the right
to get the refund of the
capital contribution + share in
accumulated profits, if any.
Legal heirs will not become
partners
In case of death of member,
shares are transmitted to the
legal heirs.
In case of death of a partner,
the legal heirs have the right
to get the refund of the
capital contribution + share in
accumulated profits, if any.
Legal heirs will not become
partners
Dissolution By agreement, mutual
consent, insolvency, certain
contingencies, and by court
order.
Voluntary or by order of
National Company Law
Tribunal.
Voluntary or by order of
National Company Law
Tribunal.
Transferability of
Interest
A partner can transfer his
interest subject to the
Partnership Agreement
A member can freely transfer
his interest
A partner can transfer his
interest subject to the LLP
Agreement
Admission as partner /
member
A person can be admitted as
a partner as per the
partnership Agreement
A person can become
member by buying shares of
a company.
A person can be admitted as
a partner as per the LLP
Agreement
Cessation as partner /
member
A person can cease to be a
partner as per the agreement
A member / shareholder can
cease to be a member by
selling his shares.
A person can cease to be a
partner as per the LLP
Agreement or in absence of
the same by giving 30 days
prior notice to the LLP.
Comparison of LLP with different business Models
5 By Rajiv Shah - Cell 9824031476
Conditions6 Partnership Company LLP
Voting Rights It depends upon the
partnership Agreement
Voting rights are decided as
per the number of shares held
by the members.
Voting rights shall be as
decided as per the terms of
LLP Agreement.
Remuneration of
Managerial Personnel
for day to day
administration
The firm can pay
remuneration to its partners
Company can pay
remuneration to its Directors
subject to law.
Remuneration to partner will
depend upon LLP
Agreement.
Contracts with
Partners/Director
Partners are free to enter
into any contract.
Restrictions on Board
regarding some specified
contracts, in which directors
are interested.
Partners are free to enter into
any contract.
Audit of accounts Partnership firms are only
required to have tax audit of
their accounts as per the
provisions of the Income Tax
Act
Companies are required to
get their accounts audited
annually as per the provisions
of the Companies Act, 1956,
All LLP except for those
having turnover less than
Rs.40 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.
Compromise /
arrangements / merger
/ amalgamation
Partnership cannot merge
with other firm or enter into
compromise or arrangement
with creditors or partners.
Companies can enter into
Compromise / arrangements /
merger / amalgamation
LLPs can enter into
Compromise / arrangements
/ merger / amalgamation
Comparison of LLP with different business Models
6 By Rajiv Shah - Cell 9824031476
7 By Rajiv Shah - Cell 9824031476
1. For registration of Limited Liability Partnership including conversion of a firm or a private
company or an unlisted public company into Limited Liability Partnership: (a) Limited Liability Partnership
whose contribution does not exceed Rs. 1 Lakh Rs. 500/-

(b) Limited Liability Partnership whose contribution exceeds Rs. 1 lakh but does not exceed Rs. 5 lakhs
Rs. 2000/-

(c) Limited Liability Partnership whose contribution exceeds Rs. 5 lakhsbut does not exceed Rs. 10 lakhs
Rs. 4000/-

(d) Limited Liability Partnership whose contribution exceeds Rs. 10 lakh Rs. 5000/-

2. The difference between the fees payable on the increased slab of contribution and the fees paid on
the preceding slab of contribution shall be paid through Form 3.



Details of fees to be paid for LLP
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3. For filing, registering or recording any document, form, statement, notice, Statement of
Accounts and Solvency, annual return and an application alongwith the Statement for conversion
of a firm or a private company or an unlisted public company into LLP by this Act or by these
rules required or authorized to be filed, registered or recorded:

(a) Limited Liability Partnership whose contribution does not exceed Rs. 1 Lakh Rs. 50/-

(b) Limited Liability Partnership whose contribution exceeds Rs. 1 lakh but does not exceed Rs. 5 lakhs
Rs. 100/-

(c) Limited Liability Partnership whose contribution exceeds Rs. 5 lakhs but does not exceed Rs. 10 lakhs
Rs. 150/-

(d) Limited Liability Partnership whose contribution exceeds Rs. 10 lakh Rs. 200/-
By Rajiv Shah - Cell 9824031476
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4. Fee for any application other than application for conversion of a firm or a private
company or an unlisted public company into LLP shall be as under:-

(a) An application for reservation of name u/s 16 Rs. 200/-

(b) An application for direction to change the name u/s 18 Rs. 10000/-

(c) Application for reservation of name under Rule 18(3) Rs. 10,000/-

(d) Application for renewal of name under rule 18(3) Rs. 5000/-

(e) Application for obtaining DPIN under rule 10(5) Rs.100/-
By Rajiv Shah - Cell 9824031476
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5. Fee for inspection of documents or for obtaining certified copy thereof shall be as
under:-

(a) For inspection of documents of an LLP under section 36 Rs. 50/-

(b) For Copy or extract of any document under section 36 to be certified by Registrar Rs. 5/- per page or
fractional part thereof


6. Fee for filing any form or a Statement of Account and Solvency or a notice or a document
by foreign limited liability partnership

(a) For filing a document under rule 34(1) Rs.5000/-

(b) Any other form or Statement of Account and Solvency or notice or document Rs.1000/-
By Rajiv Shah - Cell 9824031476
11 By Rajiv Shah - Cell 9824031476
Income tax Implication
LLPs will be treated as Partnership Firms for the purpose of Income Tax w.e.f assessment year 2010-11

No surcharge will be levied on income tax.

Profit will be taxed in the hands of the LLP and not in the hands of the partners.

Minimum Alternate Tax and Dividend Distribution Tax will not be applicable for LLP.

Remuneration to partners will be taxed as Income from Business & Profession.

No capital gain on conversion of partnership firms into LLP.

Designated Partners will be liable to sign and file the Income Tax return.

LLP shall not be eligible for presumptive taxation.

Tax rate:
30% flat tax rate + 3% education cess
No Minimum Alternate Tax & Dividend Distribution Tax


12 By Rajiv Shah - Cell 9824031476
Services available from Rajiv Shah
1. Name Reservation Services
2. LLP Agreement drafting
3. Annual Filing Services
4. Other Services viz..
Conversion of Firms / Companies to LLP
Conversion of LLP to Company (under Part IX of the Companies Act,1956
Compromise, Arrangement or Reconstruction of Limited Liability Partnerships