Comparison of llp with partnership

Comparison of llp with partnership

1. PRESENTATION ON
LIMITED LIABILITY
PARTNERSHIP
VS PARTNERSHIP
BY:
CORPORATE LAW VERTICAL
ASIJA & ASSOCIATES LLP
CHARTERED ACCOUNTANTS

2. CONTENTS
What is a LLP ?
Salient Features of LLP
What is a Partnership ?
Salient features of Partnership,
Comparison between LLP & Partnership
LLP Vs. Partnership Vis-à-Vis Income Tax
Conclusion
M/s Asija & Associates LLP, Chartered Accountants

3. WHAT IS A LLP ?
ALLPisaBodyCorporateformedandincorporatedunder
LimitedLiabilityPartnershipAct,2008,ithaslegalentity
separatefromthatofitspartnersanditshallhaveperpetual
succession
ThusLLPisahybridcontainingelementsofboth‘acorporate
structure’aswellas‘apartnershipfirmstructure’,hence
resultingintoaveryconvenientbusinessstructure.
M/s Asija & Associates LLP, Chartered Accountants

4. SALIENT FEATURES OF LLP
HybridbusinessentitycombiningfeaturesofPartnershipfirmandCompany.
Simpletoincorporate.
NolimitonmaximumnumberofPartnersasagainstrestrictionsinPartnershipfirm.
LimitedLiabilityofPartners.
Non-applicabilityofTheIndianPartnershipAct,1932.
Bodycorporatewithlegalentityseparatefromitspartners.
Perpetualexistencelikeacompany.
Capacitytosueandtobesued.
LLPisonlyforbusiness-with-profitobjectives.
M/s Asija & Associates LLP, Chartered Accountants

5. WHAT IS A PARTNERSHIP ?
The arrangement between two or more persons who have agreed to share the
profits of a business carried on by all or any one of them acting for all.
The arrangement may be either oral or written.
The persons entering into a partnership are individually known as “Partners”
and collectively known as “Firm”.
M/s Asija & Associates LLP, Chartered Accountants

6. SALIENT FEATURES OF PARTNERSHIP
Two or more persons required to form a partnership
A Partner can bind other Partner by his act and make them liable
Formed by an agreement oral or written
Liability of the partners are unlimited
Non transferability of share of a partner to outside person.
M/s Asija & Associates LLP, Chartered Accountants

7. COMPARISON BETWEEN LLP & PARTNERSHIP
Criteria LLP Partnership Which is better
LLP / Partnership
Registration of
Firm
ItisMandatorytogettheLLP
RegisteredwiththeRegistrarof
LLP
ItisnotMandatoryfora
PartnershipFirmtoget
registered
Partnership
Minimum
Number of
Members
2Persons 2Persons
-
Maximum
Number of
Members
Unlimited 20exceptincaseofbanking
business.
10incaseofbankingbusiness
LLP
Impact of
Action of Other
Partners
Partnerisnotliableandbound
bytheactionofotherpartners
Partnerisliableandboundby
theactionofotherpartners LLP
M/s Asija & Associates LLP, Chartered Accountants

8. COMPARISON BETWEEN LLP & PARTNERSHIP
Criteria LLP Partnership Which is better
LLP / Partnership
Ownership of
Property
OwnershiplieswithLLP Ownershiplieswiththe
Partners
LLP
Transferability
ofinterest
Partner’sInterestistransferable
asperLLPagreement
Notransferabilityofinterest
LLP
Legal EntityLLPhasseparateLegal
entityotherthanitspartnersand
DesignatedPartnersandcan
operatelikealegalperson
Partnershipdoesnothave
SeparateLegalEntityother
thanpartners.ofthefirm
LLP
Management ManagedbytheDesignated
PartnersasperLLPagreement
ManagedbythePartners
-
M/s Asija & Associates LLP, Chartered Accountants

9. COMPARISON BETWEEN LLP & PARTNERSHIP
Criteria LLP Partnership Which is better
LLP / Partnership
Liability of
Partners
Limitedtotheextentof
contributionasperLLP
agreement
Unlimitedandextendsto
personalpropertyofpartners. LLP
CreditworthinessLLPenjoyshighdegreeof
creditworthiness
Partnership enjoys less degree
ofcreditworthiness
LLP
Continuity of
Business
LLP has Perpetual
Succession,death or
insolvencyofpartnerdoesnot
effectitsexistence.
Death,resignationor
insolvencyofPartner,
leadstodissolutionoffirm
LLP
Dissolution /
Winding up
LLPcanbewoundupasper
procedureslaiddowninLLP
Act
Partnershipcan be
terminatedasperwillof
partners
-
M/s Asija & Associates LLP, Chartered Accountants

10. Criteria LLP Partnership Which is better
LLP / Partnership
Creation Createdbylaw Createdbyagreement
-
Digital
Signature
DesignatedPartnersarerequired
tohaveDSC
Norequirementofdigital
signature Partnership
Annual FilingFilingofAnnualReturnis
mandatory
AnnualReturnneednottobe
filed
Partnership
Audit IfturnoverexceedsRs.40Lakhs
andcontributionexceeds25
Lakhs,theauditismandatory
Nosuchrequirement
Partnership
M/s Asija & Associates LLP, Chartered Accountants
COMPARISON BETWEEN LLP & PARTNERSHIP

11. CONCLUSION
Asseenabove,outof17pointsofcomparisononly4pointsfavor
partnershipwhereas8pointsfavorLLP.Therefore,anLLPisbetteroption
thanapartnershipfirm.
LLPisanalternativecorporatebusinessformthatoffersbenefitsoflimited
liabilityofacompanyandtheflexibilityofapartnership.
ThusLLPisahybridcontainingelementsofboth‘acorporatestructure’as
wellas‘apartnershipfirmstructure’,henceresultingintoaveryconvenient
businessstructure.
M/s Asija & Associates LLP, Chartered Accountants

12. LLP Vs. PARTNERSHIP
Vis-à-Vis Income Tax
FollowingDefinitionasperIncomeTaxActisimportant
1.Definitionof“Firm”,“Partner”&“Partnership”Section
2(23)
FirmshallincludeLLPFirmsasdefinedinLLPAct.
PartnershallincludePartnersofLLPasdefinedinLLP
Act,2008
PartnershipshallincludeLLPasdefinedinLLPAct,2008
2.TaxationofLimitedLiabilityPartnership(LLP)asper
FinanceBill,2009
TheIncomeAct,1961hasthesameeffectonaLLPasit
hasonaPartnershipFirm.
M/s Asija & Associates LLP, Chartered Accountants

13. Disclosure
Thispresentationhasbeenpreparedbyourfirmtoprovideagistof
ComparisonofLLPwithCompany.
Fordetailedinsightandforbetterunderstandingofthevariousprovisionof
thesaidlaw,ourteamshallbeavailabletoprovideourprofessional
consultancyinthisrespect,ifrequiredbyyouroffice.
Neitherourfirmnoranypartneroremployeeorarticleofourfirmshall
responsibleforanydecisiontakenonthebasisofthesaidpresentationand
withoutobtainingourprofessionalguidanceorconsultationonthematterfor
whichreliancewasmadeonthispresentation.”
M/s Asija & Associates LLP, Chartered Accountants

14. For Any Further Queries Clarification Contact
CS Manish Mishra
Asso. Director
Corporate Law Vertical
[email protected]
Partner In Charge-CA Ashish Kapoor
([email protected])
Thank You….
Asija& Associates
Chartered Accountants
Ph. no. : 0522-4004652, 2205072