LLP is a separate legal entity from its partners and liability of each partner is limited to their contribution. It was introduced in INDIA by Limited Liability Partnership Act,2008. A Limited Liability Partnership (LLP) is a hybrid business entity of both a Corporation and a Sole proprietorship. The biggest advantages of LLP is often more flexible than a corporation. LLP is better than Sole Proprietorship, and it is simplest business firms to doing business in India.
An LLP Agreement must be executed between the partners detailing the name of the LLP, business to be conducted, names and details of each partner along with intimation of who are the designated partners, the profit and loss sharing ratio and retirement and induction process for partners etc.
An LLP must have at least two partners and there is no ceiling on the maximum. One of the partners of the business must be a resident of India. There is no minimum capital required in private limited company and Rs.5 Lakhs in case of a public limited company.
In an LLP, “Designated partners” will be selected and as such they will be responsible for the day to day management of the LLP and will be key in monitoring the business and filing annual returns and compliances with various government authorities.