Limited Liability Partnership or LLP is a hybrid mixture of two forms of business setup i.e. Partnership and Company. LLP is a form of business structure where two or more partners come together to start a business with the motive of earning profits. The fundamental definition of LLP is very similar to a partnership but the key point of difference is that in a Limited Liability Partnership the liability of all partners is limited unlike in a traditional Partnership.

Limited liability Partnership came into existence in India through the Limited Liability Partnership Act of 2008. As compared to partnership and company, this is quite a new form of business setup that incorporates the features of both.

Some of the key features of a Limited Liability Partnership are:

1. It has a separate legal identity which implies that the identity of the firm and the members is separate.
2. All the members of the LLP have limited liability; they are liable only up to the number of shares each of them holds.
3. LLP is governed by a completely different Act and therefore no provisions of the Partnership Act apply to it.
4. LLP is a hybrid structure that combines both, a corporate as well as a partnership form of business structure.
5. All the LLP have the right to use “Limited Liability Partnership” as the last name of their firms
6. There are no minimum capital requirements in the case of LLP, as in the case of a company.
7. LLP does not need to have compulsory audits, as in the case of a public and private company. An exception to this rule is, an LLP will need to have audits if the annual turnover exceeds over 40 lakhs or the total capital of the firm exceeds a limit of 25 lakhs.

Just like Partnership and Company have their own set of Advantages, setting up LLP grants certain advantages to both, the firm and the members:

1. Perpetual Succession: A key advantage of setting up LLP is that it has perpetual succession, meaning thereby, the Limited Liability Partnership’s existence is not dependent on its members. Therefore, even if a member retires, or dies, it will not affect the existence of the firm.
2. Easy transfer of Ownership: Just as it is easy to become a member or even leave an LLP; it is an easy process to transfer the ownership of the firm as well, as long as the transfer is allowed by the agreement.
3. Flexibility: Even though LLP is a body corporate, it is more flexible than a company registered under the Companies Act. In an LLP the flexibility of the organization is not at all compromised. The only compliance which the partners of the firm need to keep in mind is that all the activities should be according to the LLP agreement.
4. Tax benefits: Tax benefit is a major benefit that the LLP has. As compared to other business structures, LLP has lower tax rates and is also not subject to the dividend distribution tax, which implies that there will be no tax payable on behalf of the LLP while distributing profits to its partners.

Limited Liability Partnership is a hybrid structure, with its own set of rules and obligations. It comprises the features of both a partnership firm and a company, which makes it a unique form of business structure. Although it is a new concept in India, setting up a Limited Liability Partnership could be beneficial for both, the partners and the firm.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.