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Difference between LLP and Partnership form of registration

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LLP and Partnership

LLP and Partnership firm

LLP and Partnership firms are business entities that are merged or brought together by two or more individuals. These individuals are called associates. Furthermore, the profits and losses of these companies may distribute among the company’s partners according to the agreement between them. Read the article to know more about the differences between the types of business entities in India.

Benefits of choosing LLP over Partnership Firm

There are several benefits to choosing a limited liability partnership over a joint venture for your start-up. The biggest advantage of creating an LLP is limited liability and flexible management roles. Unlike partnerships, LLPs do not expose their partners to unlimited liability.

Furthermore, members or associates of a limited liability partnership may sue, and they may sue because it is a legal entity.

Similarities between LLP and Partnership firm

The similarities between the LLP and the joint venture are as follows;

  • In both forms of ent businesses, partners are not employees, but rather they are agents.
  • Also, partners have the right to pay, only if it provides for in the contract.
  • Furthermore, no partner allows engaging in competitive business without the prior consent of other partners.
  • A new partner can only introduce to the partnership with the permission of the existing partners.
  • Additionally, in case of insolvency of a partner, he or she will not allow continuing as a partner.

Difference Between LLP and Partnership


An LLP, a liability of the partners limit to the amount may invest in the company, whereas the partner and company as a partner are not considered separate law firms. For this reason, the partners are personally responsible for the partner’s unlimited debts.


LLP can register to Ministry of Corporate Affairs, while Partnership is Registration of Firms

Number of partners and other requirements

The maximum number of partners in the LLP may not limit to a minimum of two and above and minors cannot be a partner. A minimum of 2 and a maximum of 20 partners can be members of the partnership.

Agreement between partners

LLP Agreement governs the operation, management, and decision-making methodologies and other activities of the LLP. Then Partnership Deed governs the operation, management, and decision-making methodologies and other activities of the partnership.

Conversion/ transferability

The Shares can easily transfer to another person after obtaining the required consent from all the Partners in an LLP. The transferee cannot become a partner automatically. LLP cannot convert back to the partnership but can convert to a Private Limited Company or Limited Company easily.  While the Shares can transfer to another person after obtaining the required consent from all the Partners in a Partnership. The transferability of the partnership is a lengthy process. Conversion of partnership to LLP or Private Limited Company is a burdensome process.  

Ownership of assets

The firm has ownership of the assets of the company. Then the partners have equal ownership of assets.

Legal proceedings

An LLP is a legal entity that can sue or be sued, Only registered partnerships can sue any partner or any other person.

Tax liability

The income of LLP tax at a Flat rate of 30% plus education cess as applicable. Whereas, The income of the partnership tax at a Flat rate of 30% plus education cess as applicable.

The requirement for Designated Partner Identification Number

Each partner should obtain DPIN before they are appointed as the Designated Partner, In Partnership, there is no need.

Digital signature

At least one Designated Partner must have a Digital signature, In Partnership, there is no need.


By agreement, court order, insolvency, mutual consent, etc., While it should do voluntarily or by order of the National Company Law Tribunal in partnership.

Admission of partner

As per the regulation of the LLP Agreement, while as per the regulation of the Partnership Deed.

Cessation of a partner

A person can continue to be a partner as per the LLP Agreement or by giving a prior notice before 30 days in case of the absence of the same, whereas a person can continue to be a partner as per the regulation of the Partnership Deed.

Audit of accounts

All LLPs except for those having a turnover less than Rs.40 Lakhs or Rs.25 Lakhs contribution in any fiscal year may require to get their accounts audit annually as per the provisions of LLP Act 2008, while under the provisions of the Income Tax Act.


LLP’s can enter into Compromise, amalgamation, and merger, Partnership can’t enter into Compromise, amalgamation, and merger.

Final words

LLP and Partnership are similar companies but differ in the way they operate, the terms and conditions, the method of dissolving the company, and so on. Moreover, The government managed both types of companies under different terms.

Therefore, both companies enjoy different types of responsibilities, benefits/advantages, and freedom to start a business. Therefore, it is important to know the minute differences between the two so that the entrepreneur can determine which company will benefit from starting with his start.

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