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In the previous article we discussed about the............................ in this article, we will further difference between LLP and ordinary partnership.
S.N
Reasons
Ordinary Partnership
LLP
1
Applicable law
Indian Partnership Act 1932.
Limited Liability Partnerships Act 2008.
2
Registration
Registration is Optional
Registration is compulsory with ROC.
3
Separate Legal Identity
Ordinary Partnership do not have separate identity
LLP has separate legal identity.
4
Creation
It is created by an agreement between partners.
It is created by law.
5
Perpetual succession
Ordinary Partnership do not have perpetual succession.
It has perpetual succession and individual partners may come and go.
6
No. of member
At least 2 and maximum of 20 Partners.
Minimum 2 members are required but there no limit for maximum member.
7
Liability of Partner/member
Liability of partners is unlimited and every partners are responsible jointly or severally for work done by each other.
Liability of partners are limited to the extent of their contributions to LLP
8
Principal agent relationship
Partners are the agents of the firm and of each other.
Partners are agents of the firm only and not of other partners.
9
Ownership of Assets
Partnership firm can not own any assets.
As the LLP is the separate legal entity, it can own assets.
If you want to form an ordinary Partnership, there is no need for registration. Individuals can do business without registering the Partnership. So if you want to form a Partnership, go ahead and form a partnership business without the burden of registration the major concerns of people is about proceedings and documentations. People choose to form a simple partnership because they do not want the long legal proceedings and regulations that come along with forming a LLP.Don’t worry, the complexity is slightly overrated. Formation of Partnership is definitely easier from a regulatory point of view but all the basic procedures – getting a Service Tax / VAT registration, getting a PAN & TAN Card, opening a fresh bank account and getting an IEC still have to be complied with, even if you start as a simple Partnership. And if your income is above the taxable limit, you need to file tax returns irrespective of whether you are a simple Partnership or LLP.