Limited Liability Partnership (LLP) Definition, Benefits, and How It Works
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1. Introduction to Limited Liability Partnership (LLP) – A Limited Liability Partnership (LLP) is a mix of partnership and corporation. In India, LLP or limited liability partnership is perfect for professional services such as law, accounting, and consulting firms which were introduced under the Limited Liability Partnership Act, 2008. In contrast to traditional partnerships, LLPs are separate legal entities, so partners are liable only for their investment and their own negligence, but not for the actions of other partners or the firm’s obligations. An LLP needs a minimum of two partners upon incorporation and does not have a maximum number of partners. This is required to register with the Ministry of Corporate Affairs along with a unique name for the business as well as a registered address. A LLP agreement delineates details such as the sharing of profits, dispute resolution procedures, and the duties of members. Limited liability, operational freedom, and pass-through taxati...