Advantages and Disadvantages of Limited Liability Partnership Act Essay Example

Advantage And Disadvantages of Limited Liability Partnership | Advantages * Separate legal entity * Easy to establish * Flexibility without imposing detailed legal and procedural requirements * Perpetual existence irrespective of changes in partners * Internationally renowned form of business in comparison to Company * No requirement of 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 other partners. * Personal assets of the partners are not exposed except in case of fraud. * Easy to dissolve or wind-up * Professionals like CS / CA / CWA / Lawyers can form Multi-disciplinary Professional LLP * No requirement to maintain statutory records except Books of Accounts * Less Cost of formation (Compared to a company)Disadvantages * LLP cannot raise funds from Public * Any act of the partner without the other may bind the LLP. * Under some cases, liability may extend to personal assets of partners. * No separation of Management from owners |
Limited liability partnerships are relatively new creations but are commonly used for their financial protections. With a general partnership, individuals may be personally responsible for a partner's actions. Limited liability partnerships, or LLPs, limit the amount that may be recovered in a lawsuit to partnership assets alone. This lead to the rapid success of the LLP: in the early 1990s, only a few states allowed them; now, every state and the District of Columbia allow them. By combining aspects of partnerships and corporations, limited liability partnerships offer several advantages and disadvantages from both.
Advantage 1: Limited Liability 1. Limited liability partnerships, not surprisingly, offer limited liability for partners. That means that each partner is responsible only for the amount of money he has given or promised to the