Partnerships are registered under the Partnership Act, 1932. The partners of a partnership registered under the Partnership Act, 1932 are personally liable for an unlimited amount of Partnership liabilities. Hence, the partnership firm and the Partners are not considered separate legal entities; neither does the Partnership have perpetual existence.
Register LLPs under the Limited Liability Partnership Act, 2008. The Partners of an LLP are not personally liable for the liabilities of the Partnership, and the liability of a Partner is limited to the amount of his/her capital contribution to the LLP. Therefore, the LLP and the Partners of an LLP are considered to be separate legal entities and the LLP has a perpetual existence, until dissolved by the Promoters.
Any Indian Citizen residing in India can be a Partner in a Partnership Firm, including minors. A Partnership Firm must have a minimum of 2 Partners and can only have a maximum of 20 Partners. The Partnership Deed defines aspects such as Management of the Firm. To manage the Partnership Firm, one or more Partners can be designated.
Any Indian Citizen residing in India can be a Partner in an LLP. Foreign Direct Investment is allowed in an LLP with prior RBI approval. Minors are, however, not allowed to be part of an LLP. An LLP must have a minimum of 2 Partners and can also have unlimited Partners. The LLP Agreement governs aspects of management of an LLP and designates one or more Partners to manage the activities of the LLP.
A person can transfer the share in a Partnership to another person after obtaining the permission of all the Partners in a Partnership. The transferability of a Partnership is cumbersome. There is a lengthy process for converting the partnership into an LLP or a Private Limited Company,
The share of an LLP can be transferred. However, the Transferee is not allowed to become a Partner automatically. The share of an LLP can be transferred to another person more easily. An LLP can be converted into a Private Limited Company or a Limited Company easily.
The tax on Profits of a Partnership firm is 30% + educational cess. There is no annual return filing requirement for a Partnership firm.
The tax on LLP profits is 30% + educational cess. LLP must file an annual return with the Ministry of Corporate Affairs(MCA).
Register Partnership firms with the Registrar of Firms. Draft a Partnership Deed for registering the Partnership firm with the Registrar of Firms. IndiaFilings can register your Partnership Firm for Rs.6,000/-
Register LLPs with the Ministry of Corporate Affairs. LLP registration process is similar to that of a Private Limited Company Incorporation process, viz. obtaining Digital Signature Certificate for the Partners, obtaining Designated Partner Identification Number (DPIN) for the Partners, obtaining name approval from MCA, obtaining Incorporation Certificate and filing LLP Agreement. IndiaFilings can register your LLP for Rs.8000/-
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