LLP (Limited Liability Partnership) are governed under Limited Liability Partnership Act, Introduced in India in the year 2008. LLP act allows conducting business similar to the partnership in India, but there are some differences between Partnership and LLP.
Difference between Limited Liability Partnership and Partnership
| PARTICULARS | LIMITED LIABILITY PARTNERSHIP | PARTNERSHIP |
| GOVERNED BY: | Limited Liability Act, 2008 | The Partnership Act, 1932 |
| TIME For Incorporation | 7-10 days in complete process | 5-7 days |
| LIABILITY | Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner. | Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets. |
| TAX LIABILITY | 30%+ health and education cess | 30%+ Health and education cess |
| PRINCIPAL/AGENT RELATIONSHIP | Partners act as agents of LLP and not of the other partners. | Partners are agents of the firm and other partners. |
| DIRECTOR IDENTIFICATION NO./ DESIGNATED PARTNER IDENTIFICATION NO. | Each Designated Partners is required to have a DPIN before being appointed as Designated Partner of LLP. | The partners are not required to obtain any identification number |
| DIGITAL SIGNATURE | As forms are filled electronically, therefore one Designated Partner should have Digital Signatures. | There is no requirement of obtaining Digital Signature |
| ANNUAL FILING | Annual Statement of accounts and Solvency & Annual Return is required to be filed with Registrar of Companies every year. | No return is required to be filed with Registrar of Firms |
| AUDIT OF ACCOUNTS | All LLP except for those having turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008. | Partnership firms are only required to have tax audit of their accounts as per the provisions of the Income Tax Act |
| CREDIT WORTHINESS OF ORGANIZATION | Will enjoy Comparatively higher creditworthiness from Partnership due to Stringent regulatory framework but lesser than a company. | Creditworthiness of firm depends upon goodwill and creditworthiness of its partners |
| NUMBER OF MEMBERS | Minimum 2 partners and there is no limitation of maximum number of partners. | Minimum 2 and Maximum 20 |
| REGISTRATION | Registration with Registrar of LLP required. | Registration is optional |
ITR Form: Return is to be filed in form ITR-5, this form is meant for ITR filing of Firms, LLP’s, AOP (Association of Person), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund.
Audit
Those LLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to file their Income Tax. They are required to get their books audited under the Income Tax Act.