The partners of a Partnership firm registered under the Partnership Act, 1932 are personally liable for an unlimited amount of Partnership liabilities.
Any Indian Citizen residing in India can be a Partner in a Partnership Firm including minors. A Partnership Firm must have a minimum of 2 Partners and have a maximum of 20 Partners.
The share in a Partnership can be transferred to another person after obtaining the permission of all the Partners in a Partnership.
The net Profits of a Partnership firm are taxed at 30% + educational cess. There are no annual return filing requirement for a Partnership firm.
Partnership firms are registered with the Registrar of Firms. A Partnership Deed must be drafted for registering the Partnership firm with the Registrar of Firms.
The Partners of a LLP are not personally liable for the liabilities of the Partnership and the liability of Partners is limited to the amount of his/her capital contribution to the LLP.
Any Indian Citizen residing in India can be a Partner in a LLP. Foreign Direct Investment is allowed in a LLP with prior RBI approval. Minors are however not allowed to be part of a LLP. A LLP must have a minimum of 2 Partners and is allowed to have unlimited Partners.
The share of a LLP can be transferred. However, the Transferee is not allowed to become a Partner automatically. The share of a LLP can be transferred to another person more easily.
The Profits of a LLP are taxed at 30% + educational cess. LLP must file annual return with the Ministry of Corporate Affairs(MCA).
LLPs are registered with the Ministry of Corporate Affairs. LLP registration process is similar to that of a Private company incorporation process, viz. obtaining Digital Signature Certificate for the Partners, obtaining Designated Partner Identification Number (DPIN) for the Partners, obtaining name approval from MCA, obtaining Incorporation Certificate and filing LLP Agreement.