Difference between Limited Liability Partnership and Partnership Firm PDF Print E-mail
SR. NO.PARTICULAR LIMITED LIABILITY PARTNERSHIPPARTNERSHIP FIRM
1.Governing LawThe Limited Liability Partnership Act, 2008 and various Rules made thereunder The Indian Partnership Act, 1932 and various Rules made thereunder
2Registration Compulsory Optional
3Creation Created by lawCreated by contract
4Separate Legal EntityIt is separate legal entity, separate from its partners\ designated partners.It is not separate legal entity from partners. Partners are collectively referred as firm.
5Perpetual succession It has perpetual succession.It does not have perpetual succession.
6Purchase of PropertyLLP can also purchase movable / immovable property in its namePartnership firm cannot purchase movable / immoveable property in its name. the same must be purchased in the name of partners.
7Common SealIt denotes the signature of the Company and LLP may have its own common seal, if it besides to have one.Not required
8Formalities of Incorporation Various documents / declarations executed in prescribed formats pre-filled in designated e-forms are required to be filed with ROC along with filing fee.Partnership deed along with form/ affidavit required to be filed with Registrar of firms along with requisite filing fees.
9Time line It will take approx. 20  days to incorporate ( inclusive of time taken to obtain DPIN)It will take approx. 7 days to incorporate.
10Expenses for formation Minimum Statutory fee for incorporation of LLP is Rs. 1500/- and Maximum fee for incorporation of LLP is Rs. 7000/- (approx.)Minimum Statutory Fee does not exceed to Rs. 500/- and Maximum Statutory Fee is Rs. 5000/-
11Legal ProceedingLLP can also sue and be suedOnly registered partnership can sue.
12Taxation Its status in unclear, pending changes in income tax act.It is a separate taxable entity
13NameSuffix ‘LLP’ or Limited Liability Partnership has to be added to the name.No such requirement.
14Change of nameThe name of the LLP can be changed with the prior approval of Central Government.The name of the Partnership firm can be changed
15Ownership of AssetsThe LLP has ownership of assets and  Partners only have capital contribution  in the LLPPartners have joint ownership of all the assets
16Liability Liability of partners is limited upto their capital contribution however in case a partners acts with an intension to conduct fraud, they are personally liable.Liability of partners is unlimited
17Agency Relationship Partners are agents of LLPPartners are agents of the firm and each other
18Contracts / Business transaction by Member/ Directors/ PartnersA partner can enter into contract with the LLP A partner can not enter into contract with the firm
19Power of Member\ Partner\ DirectorThe power of partners/ designated partners to conduct the day to day affairs is specified by LLP agreement / LLP act.All the partners have say in the day to day management of the firm or as specified in the partnership deed if there is any
20Dissolution by an act of partners / members / directorsContinuance of LLP is not affected by the acts of its Partners.Partnership contract can be put to an end by anyone of the members \ on happening of event specified in partnership act, 1932
21Transferability of interest Rights/ interest of partners are  transferable as per the provisions of LLP agreement.Transferability of Interest subject to the mutual consent of all the members.
22Share CertificateThere are no provisions for issuing of Share Certificate. Rights/ Interest of the Partners in the LLP are evidenced by Partnership agreement.There are no provisions for issuing of Share Certificate. Rights/ Interest of the Partners in the firm are evidenced by Partnership deed, if any.
23Jurisdiction of Company Law Board (CLB)CLB has jurisdiction over the affairs of the LLPCLB has no jurisdiction
24NatureA LLP is a body corporate formed and incorporated under this act and which has legal entity separate from that of its partners, having perpetual succession and liability of its partner shall be limited.  Partnership is a relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all with unlimited liability.
25Compromise \ arrangements \ merger \ amalgamationProvisions exist for Compromise \ arrangements \ merger \ amalgamation for LLP in the act.There is no provision for Compromise \ arrangements \ merger \ amalgamation in the Partnership firm.
26Minimum Capital requirementNo such requirementNo such requirement
27Books of AccountsBooks of accounts must be prepared as specified in the LLP Act.Not applicable
28Manner of Keeping Books of Accounts Cash basis or accrual basisCash or accrual basis
29Filing of Annual AccountsStatement of accounts and solvency are required to be filed with ROC annually in the prescribed format.Not applicable
30Audit of AccountsAs per the provisions of LLP act, accounts to be audited annually except for LLP’s having turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year.The Audit of accounts is as per the provisions of income tax act. 
31Applicability of Accounting standards Its status in unclear, pending changes in income tax act.Accounting standard are not applicable.
32Mode of Service documentsDocuments to be served on LLP / designated partners may be served through electronic meansService of documents can not be served through electronic means
33Annual Return Annual Return is required to be filed with the ROC annually in the prescribed formatNot applicable
34Director Identification Number / Designated Partner Identification NumberEach Designated partner required to have a DPIN before being appointed as a Designated Partner of LLP.No such requirement
35Digital SignatureAtleast one designated partner of the LLP should have their Digital signature. Digital signature is a pre-requisite for e-filing.Not Applicable. Documents are filed manually.
36Minimum Number of MemberMinimum two partners  Minimum two partner  
37Maximum number of Member  No cap of maximum number of its partnersMaximum 10 for banking business and 20 for other business.  
38Designated partner/ Director/ Managing PartnerMinimum two designated partner No cap on the minimum number of Managing partner
39Need for Designated partner/ Director/ Managing Partner to be partner/ memberThe designated partner need not be a partner of the companyManaging partner shall be a partner of the firm
40Vacancy In case the LLP has only minimum number of designated partner then casual vacancy in the office of designated partner must be filled in 30 daysNot applicable
41Remuneration / SalaryRemuneration will be provided
only if provided in the LLP agreement.

A partner is not entitled to receive any remuneration for taking part in the conduct of business
42Memorandum and Articles of Association \ Partnership deed/ Partnership AgreementLLP Agreement is a charter of the LLP which denotes its scope of operation. Partnership Deed is a charter of the firm which denotes its scope of operation.
43Meetings Meeting of the Designated Partners have to be held at specific time period as per the Provisions of LLP Act.No such requirement
44Compounding of offencesOffences punishable with fine are compoundable Not Applicable
45Change in directors / designated partners/ PartnersNotice of change of director is to be given to the ROC.Notice of change of partners should be given to Registrar of Firms
46Publication of nameOfficial correspondence / publication/ letter head/ invoices must mention the full name of the company and address of the registered office and a statement that it is registered with limited liability.Not applicable
47Rights / Duties / obligation of Partners / Managing Partners / DirectorsRights / Duties / obligation of directors are governed by  Partnership AgreementRights / Duties / obligation of directors are governed by partnership deed.
48Minutes Decisions taken in meetings must be recorded as minutes with in 30 daysNot applicable
49Oppression and Mismanagement by majority shareholders No provision relating to redressal in case of oppression and mismanagement No such provisions
50Voting RightsEach partner has only one voteNot applicable
51Transfer of Share / Partnership rights in case of deathIn case of death of partner, the legal heir has the right to refund of capital contribution + share in accumulated profits, if any.  Legal Heirs will not become partnersIn case of death of partner, the legal heir has the right to refund of capital contribution + share in accumulated profits, if any.  Legal Heirs will not become partners
52Cessation as partners / memberA partner can cease to be a member by transferring his share but the transfer of right or cessation of partner does not by itself cause the disassociation of the partner notwithstanding his retirement, and he like the other continuing partners of the firm remain liable as partner to third parties for any act done by any of them which would have been an act of the firm if done before retirement until public notice is given of the retirement either by the retired partner or any other partners of the reconstituted firm.A person can cease to be a member and will be entitled to his share of profit and capital at the time of retirement.
53Admission as partner/ memberA person can be admitted as a partner with the consent of all the partners.A person can be admitted as a partner with the consent of all the partners.
54Drawing Drawings are permitted as per the LLP agreementDrawings are permitted.