Good Investor Management: New Venture Tips #26

LLP Structuring
*By Ameen Ahsan Strategy Consulting*

A new trend that has been observed of-late is that more and more entrepreneurs have started opting for Limited Liability Partnerships.

As the year draws to a close, everyone is asking the same question – Should I form a Partnership or a Limited Liability Partnership? Which option will suit me better?
Technically, a Limited Liability Partnership has many advantages. In fact, it would not be wrong to say that an LLP combines some of the advantages of a Private Limited Company with some of the advantages of a simple Partnership.

A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence, this is an important difference from that of a unlimited partnership. In an LLP, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents.

Advantages of LLP

• Renowned and accepted form of business worldwide in comparison to Company.
• Low cost of Formation.
• Easy to establish.
• Easy to manage & run.
• No requirement of any minimum capital contribution.
• No restrictions as to maximum number of partners.
• LLP & its partners are distinct from each other.
• Partners are not liable for Act of partners.
• Less Compliance level.
• No exposure to personal assets of the partners except in case of fraud.
• Less requirement as to maintenance of statutory records.
• Less Government Intervention.
• Easy to dissolve or wind-up.
  

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*Kerala's finest experts for Feasibility Studies, Strategy Reports / Project Reports, Business Models and Vision Realisation*