LLP Full Form

LLP Long Form - LLP stands for Limited Liability Partnership. LLP is known to be a mix of a traditional partnership, and a company as some of its features are similar to a traditional partnership and some matches with a company. Let’s discuss LLP company full form.

Limited Liability Partnership (LLP Full Form) provides the flexibility of a traditional partnership firm as well as the benefit of limited liability of a company at a low compliance cost as defined by LLP company full form. This means that in an LLP, the members have the flexibility of organising their internal management on the basis of a mutually agreed-upon agreement, similar to a partnership firm, and the partners have limited liability, where each partner's liability is limited.

In this article, we are going to discuss the long form of LLP and LLP in full form.

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Furthermore, LLP long form implies that one partner in an LLP is not responsible or liable for the negligence, misconduct, or wrongdoing of another partner. As a result, it is a cross between a corporation and a partnership. In some countries, however, an LLP must have at least one "General Partner" with unlimited liability.

In companies where the liability is unlimited, the partners' personal assets can be sold to compensate for losses or to pay off debts. To address this limitation, the government enacted the LLP 2008 Act, which went into effect on April 1, 2009. As a result, an LLP is a legal entity because it must be registered with the Registrars of Companies (ROC) and is governed by the LLP Act 2008.

Features/Advantages of The LLP:

• Legal Entity Separate with Limited Liability: It is distinct from its partners, or the partners are distinct from the firm. No one can touch a company's personal property if it suffers significant losses. Only the money they invested in the company will be lost. The liabilities are limited and proportionate to the partners' share of the capital. Furthermore, all partners should be the Limited Liability Partnership's agent but not the agents of the other partners.

• Simple to set up: The LLP agreement must be signed by the partners at the Registrar of Companies (ROC) office.

• It is adaptable: It allows for changes to be made. It gives the members the freedom to organise their internal management on the basis of mutual agreement, as in a partnership firm.

• It also has perpetual succession, which means that if any of the partners dies or goes bankrupt, the company will not be dissolved.

• There is no limit on the number of partners: There should be a minimum of two partners, at least one of whom should be an Indian citizen, but there is no limit on the number of partners, and foreign partners are also permitted.

• An LLP can only be formed for profit. It cannot be formed for charitable or non-profit purposes.

Furthermore, it is less expensive and easier to dissolve an LLP because it requires fewer legal formalities, and the partners cannot be held liable for the misdeeds, frauds, and so on of other partners.

Similarities Between  LLP and PLC

• To begin incorporation, both LLPs and Private Limited Companies require a minimum of two directors/shareholders/partners.

• Private Limited Companies and LLPs both have Limited Liability with regard to personal assets. (Limited to a nominal value of shareholder shares)

• LLPs and Private Limited Companies are both separate legal entities from their partners and shareholders.

Why LLP is Better Than a Private Limited Company?

It is clear that the registration procedures for both Private Limited Companies and LLPs are straightforward. Thus, it is not a matter of ease of incorporation; rather, it is a matter of deciding the company's path and future. We've also seen that incorporating a private limited company can be advantageous at times. However, we present a comprehensive case for why LLPs should be preferred over Private Limited Companies.

• LLPs combine the operational benefits of a corporation with the flexibility of a partnership firm.

• In comparison to a Private Limited Company, the fee for incorporating an LLP firm is very low.

• An LLP's compliance requirements are significantly lower than those of a private limited company. If an LLP has not reached the 40 lakh turnover or 25 lakh revenue contribution threshold, the frequency of mandatory audits is zero.

• A private limited company has limited ownership and can only have a maximum of 200 shareholders. LLPs, on the other hand, have no such limit.

• Meeting requirements for PLCs are significantly higher, with the requirement of holding four board meetings and one annual general meeting of the company.

• There is no legal requirement for an LLP to hold meetings.

• The cost of incorporating as well as maintaining a PLC (Rs. 15000 Incorporation+ Rs. 15000 Compliances + Rs. 15000 Audit) is three times that of an LLP (Rs. 11,000 Incorporation + Rs. 4,000 Compliances). As a result, LLP is a cost-effective option.

• Adopting the PLC model may be financially detrimental to startup owners. PLCs are frequently unable to pay or fail to pay their compliance requirements on time, resulting in fines of up to Rs. 1 lakh. However, with LLPs, you can avoid the hassle of fines entirely. The fees for LLP compliance are very low and rarely result in a fine.