What Are the Differences between LLP Company and Partnership


What Are the Differences between LLP Company and Partnership

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Often new entrepreneurs are confused about what are the differences between LLP company and partnership. It is important for them to understand the difference between these two business structures before deciding which one suits their needs and goals. This article will help them to make a well informed decision.

The most important differencebetween a LLP and a partnership is that an LLP offers its partners limited liability protections. This means that if the LLP gets sued, the partners' personal assets (houses, cars, retirement funds, etc) will not be at risk of being taken by creditors. This makes an LLP more appealing to professionals who need a business structure that allows them to take on clients without worrying about the liabilities that come with it.

Other advantages of an LLP include the ability to retain profits and a tax treatment that is similar to a corporation's. The level of personal liability protection offered by an LLP varies by state. The state's statutes set forth who can be a partner and how much liability they will have.

The disadvantages of an LLP include the need to register it at Companies House, which exposes the LLP to public disclosure and reporting requirements that a partnership does not have to meet. lso, if an LLP's members want to add or retire a partner, the operating agreement should provide for this process MCA Portal. Another drawback is that the LLP is not treated as a separate legal entity for tax purposes and its income will be reported on the members' personal income taxes. This can be a drawback for some professionals who want to minimize their tax burdens.

 

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