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. It is governed by the Limited Liability Partnership Act, 2008.
Key Features
- Separate Legal Entity: LLP has its own identity, separate from partners
- Limited Liability: Partners' liability is limited to their contribution
- Perpetual Succession: LLP continues regardless of partner changes
- Flexibility: Partners can decide profit-sharing and management
- No Minimum Capital: Can start with any capital contribution
Requirements
| Requirement | Details |
|---|---|
| Minimum Partners | 2 (no maximum limit) |
| Designated Partners | Minimum 2 (with DPIN and DSC) |
| Resident Partner | At least 1 must be Indian resident |
| Registered Office | Must have address in India |
| LLPIN | Unique identification number assigned |
LLP vs Private Limited Company
| Aspect | LLP | Pvt Ltd Company |
|---|---|---|
| Compliance | Lower | Higher |
| Audit | If turnover > Rs. 40 lakhs or capital > Rs. 25 lakhs | Mandatory |
| Profit Distribution | Flexible | As dividends |
| Foreign Investment | Restricted | Easier under automatic route |
| Tax Rate | 30% (no dividend tax) | 25%/30% + dividend tax |
Ideal For
- Professional services (CAs, Lawyers, Architects)
- Consultancy firms
- Small businesses with limited compliance appetite
- Startups that don't need external funding
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