Partnership or LLP — comparing the legal structure

At a glance

The choice affects legal personality, liability, governance and compliance. It should follow the intended business and risk allocation rather than only setup cost.

Law and context

The Partnership Act and Limited Liability Partnership Act establish different frameworks. An LLP is a body corporate under its Act, while partnership liability follows the Partnership Act. Limited liability also has statutory qualifications and does not erase a personal guarantee.

Practical next step

Prepare the proposed owners, contributions, management roles, borrowing needs and compliance capacity. Obtain legal and tax advice on the structure before transferring assets or signing customer contracts.

Important qualifications

This page does not recommend one form for everyone or promise protection from all personal liability.

Document checklist

• Owners and roles
• Capital and assets
• Borrowing and guarantee plans
• Compliance responsibilities

Sources

• The Indian Partnership Act, 1932 — 4,25
• The Limited Liability Partnership Act, 2008 — 3,23,27-30

General information. The appropriate course depends on the complete facts, documents and applicable law. Editorial process and website disclaimer.