Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners. LLP has many advantages like :- (Separate Legal Entity:) LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve. (Flexible Agreement:) Transferring the ownership of LLP is also simple.
A person can quickly be inducted in as a designated partner and the ownership switches to them. (Suitable For Small Business:) LLPs having a capital amount less than 25 lakhs and turnover below 40 lakhs per year do not require any formal audits. It makes registering as LLP beneficial for small businesses and startups. An LLP can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs. (No Owner Distinction:) An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, VCs do not invest in the LLP structure.