LLP Vs Partnership Firm

LLP Annual Return Filing - MCA & Tax Due Dates - Settlemytax

LLP Vs Partnership Firm

Most of the people who look to incorporate an LLP are always confused between registering an LLP or registering a Partnership Firm. Though both these business structures have many similarities, there are some striking distinct features of each of them.


  1. Registration: LLP is registered under the “Limited Liability Partnership Act, 2008”. It is created by law. It has to be registered under the Registrar Of Companies. Whereas a partnership is registered under “ The Partnership Act, 1932” and is created by contract. A partnership may be registered or unregistered. It has to be registered under the ROF- Registrar of Firms.
  2. Time is taken to incorporate: The registration process of an LLP takes about 7-10 days whereas a Partnership Firm is easier to form and can be formed within 5-7 days.
  3. Name of the Enterprise: It is mandatory for an LLP to have “LLP” as a suffix but this is not the case with a partnership firm. A partnership firm can have any name.
  4. Partners: There is no upper limit of the number of partners an LLP can have. Whereas a Partnership can have a maximum of 20 partners only including minors. An LLP cannot have minor partners.
  5. Foreign Direct Investment: FDI is possible only in the case of an LLP. A partnership cannot have FDI.
  6. Compliance and Taxation: LLP has to file annual returns with the ROC along with the Income Tax returns. A partnership firm does not have any annual filing except income tax returns.
  7. Perpetual succession: LLP has perpetual succession but a partnership firm does not have perpetual succession.
  8. Purchase of property: LLP can purchase a property in its name. But a partnership firm cannot do so. It can buy property in the name of its partners.
  9. Limited Liability: The liability of members of LLP is limited to the capital contribution made by each. But the liability of partners in the Partnership Firm is unlimited. 
  10. Dissolution: An LLP cannot be dissolved by the act of its members. A partnership can be dissolved by one or more of its partners.


LLP form of Business Structure has gained popularity these days for structured form working with a group of professionals. It has the benefits of the flexibility of a partnership firm as well as the corporate structure of a Private Limited Company.

But still, Partnership firms rule the core unorganized sector of business in India. It is the most popular form of business structure when working in a closed known group of people.

SETTLE MY TAX offers the best possible option of formation of a business structure based on the clients’ requirements and the nature of the business to be undertaken. Check out the attractive price structure offered for each form of Business Setup and its compliances

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