Advantages of Limited Liability Partnership over Partners
Limited Liability Partnership, abbreviated as LLP, is a kind of business organization. It has become very common now-a-days in India.
The Limited Liability Partnership Act, 2008 deals with the advantages of LLP over partnership business. LLP contains almost all the advantages of a partnership but does not have the disadvantages of the normal partnership.
Advantages of the Limited Liability Partnership:
1. Number of partners is not limited: Unlike normal partnership there is no limit in the number of partners in a LLP.
2. Liability of partners is limited: Unlike traditional partnership the liability of partners is restricted.
3. Personal assets of the partners not connected with the business: Unlike normal partnership the personal assets of the partners are no way connected with the organization.
4. Partners do not act as agents: In a normal partnership the partners act like agents of other partners. But in a Limited Liability Partnership it is not so.
5. LLP is recognized as corporate body: LLP is such a business vehicle which is treated as a corporate body.
6. No minimum capital contribution for the partners: Unlike traditional partnership there is no lower limit of capital contributed by its partners.
7. Partners are free to transfer their right to gain profits: In a LLP the partners are free to transfer their right to gain profits to the third party.
8. No rigidity in management: In a LLP there is no rigidity in management of business.
9. Attracts investment from financers: Unlike normal partnership a LLP attracts investment from financers.
10. A partner can enter into a joint venture: In a LLP the partners are free to enter into a joint venture on behalf of it.
11. Tax efficiency: Unlike normal partnership a LLP has the advantage of tax efficiency.
12. Statutory obligations are less: Unlike normal partnership a LLP does not have any mandatory obligations such as holding meetings, maintaining books, or compulsory registers.
13. Less Governmental Intervention: Unlike traditional partnership in a LLP the Governmental Intervention is negligible.
14. Simple winding up procedure: Another advantage of Limited Liability Partnership over Partnership is that the winding up procedure is not complicated.
15. Partners are free to increase the capital: In a LLP the partners are free to increase the capital whenever they wish.
16. Partners are free to withdraw their invested capital: Unlike normal partnership the partners are free to withdraw their invested capital.