1. Cost Effective: – To form a LLP is very cost effective than to form a company.
2. Credit Worthiness of organization:- LLP enjoy Comparatively higher creditworthiness from Partnership due to Stringent regulatory framework.
3. Applicability of Accounting Standards:- Companies have to mandatorily comply with accounting standards where in the case of LLP it is not yet notified. So no applicability.
4. Audit of accounts:- Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 1956 where as all LLP except for those having turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008.
5. Maintenance of Statutory Records: Comparatively less documents to be maintain.
6. Contracts with Partners/Director: Restrictions on Board regarding some specified contracts, in which directors are interested where as Partners are free to enter into any contract under LLP.
7. Statutory Meetings: Mandatory in case of company whereas no such requirement in the case of LLP.
8. Transfer of Share / Partnership rights in case of death: – In the case of companies in case of death of member, shares are transmitted to the legal heirs. Where under LLP, in case of death of a partner, the legal heirs have the right to get the refund of the capital contribution + share in accumulated profits, if any. Legal heirs will not become partners.
9. Liability of Partners/Members: In case of companies: – Generally limited to the amount required to be paid up on each share. In the case of LLP, limited to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.
– By Mr. Harsh Verma.