LLP vs Partnership
Detailed comparison of Limited Liability Partnership vs Partnership Firm. Compare pros, cons, costs, compliance requirements, taxation, and get expert guidance to choose the right structure for your business.
View All ComparisonsQuick Comparison
| Aspect | LLP | Partnership |
|---|---|---|
| Liability Protection | LLP offers limited liability | LLP offers limited liability |
| Compliance | Partnership has lower compliance | Partnership has lower compliance |
| Fundraising | Both have limited fundraising ability | Both have limited fundraising ability |
| Costs | Partnership has lower costs | Partnership has lower costs |
| Credibility | LLP has better professional credibility | LLP has better professional credibility |
Detailed Comparison
Limited Liability Partnership
Pros
- Limited liability protection
- Separate legal entity
- Lower compliance than company
- Professional credibility
- Tax benefits
- Flexible management
Cons
- Higher costs than partnership
- Annual compliance required
- Limited fundraising ability
- Cannot issue shares
Costs
- Registration: ₹8,000 - ₹15,000
- Annual: ₹5,000 - ₹10,000
- Compliance: ₹8,000 - ₹15,000 per year
Compliance Requirements
- • Annual return (Form 11)
- • Statement of accounts (Form 8)
- • Income tax return
- • GST compliance
Taxation
Partners taxed individually, no corporate tax
Best For
- • Professional services
- • Consulting firms
- • Small to medium businesses
- • Service-oriented businesses
Partnership Firm
Pros
- Simple registration
- Lower costs
- Flexible structure
- Easy to dissolve
- Minimal compliance
- No minimum capital
Cons
- Unlimited liability
- No separate legal entity
- Personal assets at risk
- Less credibility
- Difficult to raise funds
Costs
- Registration: ₹2,000 - ₹5,000
- Annual: ₹3,000 - ₹8,000
- Compliance: ₹5,000 - ₹10,000 per year
Compliance Requirements
- • Income tax return
- • GST compliance
- • Basic bookkeeping
Taxation
Partners taxed individually on profits
Best For
- • Small businesses
- • Traditional trades
- • Low capital needs
- • Family businesses
Expert Recommendation
Choose LLP for liability protection and better credibility. Choose Partnership for simplicity, lower costs, and small traditional businesses.
Frequently Asked Questions
Common questions about LLP vs Partnership
Which structure is better for liability protection?
LLP offers limited liability, Partnership has unlimited liability
Which has lower compliance requirements?
Partnership has lower compliance, LLP has moderate compliance
Which is better for raising funds?
Both have limited fundraising ability, but LLP is slightly better
Which has lower costs?
Partnership has lower costs, LLP has moderate costs
Which offers better professional credibility?
LLP has better professional credibility
What are the tax implications?
Both offer similar tax benefits
Which is better for scaling the business?
LLP is better for scaling
Can one structure be converted to another?
Partnership can be easily converted to LLP
Need Expert Guidance?
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