A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In anLLP, one partner is not responsible or liable for another partner's misconduct or negligence. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
The major advantage of Limited Liability Partnership:
- Agreement Basis: Is organized and operates on the basis of an agreement.
- Flexibility: Provides flexibility without imposing detailed legal and procedural requirements. It has more flexibility as compared to a company.
- Efficient Management: It enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
- Tax Benefits: Another one of the great benefits of operating underneath an LLP is how you file taxes. The partnership itself doesn’t have to file taxes as a business, which provides great breaks for the company. However, each individual partner must file a variety of different tax forms regarding the business.
- As Many Owners As Needed: One of the greatest things of a limited liability partnership is that there is no limit on the amount of owners that can be involved with the business. This is great because it evenly spreads out the amount of liability that each partner can have if something where to go wrong with the business.