WHAT IS LIMITED LIABILITY PARTNERSHIP (LLP) & ITS BENEFITS – By CS RANJEET GOLA
WHAT IS LIMITED LIABILITY PARTNERSHIP (LLP) ?
Limited Liability Partnership is one of the fastest growing form of business in India. LLP contains the elements of a Private Company as well as of the Partnership Firm. It Gives the Benefits of Limited Liability Company and flexibility of a Partnership, so it may also be said as the hybrid of a corporate Structure & a Partnership Structure.
BENEFITS OF LIMITED LIABILITY PARTNERSHIP (LLP)
LLP form is a form of business model which:
- LLP is organized and operates on the basis of an agreement.
- LLP provides flexibility without imposing detailed legal and procedural requirements.
- LLP enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
- The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
- Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
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CS RANJEET GOLA