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Consider all the Good and Bad Points of LLP and Then make a Decision

Setting up a business is never an easy task; a person has to take care of each and every aspect before investing in a business. A person has to determine whether he wants to start a partnership firm or a company, if a firm then what type of firm. Is it an unlimited liability partnership or limited liability partnership? There are so many decisions are to be taken before starting a business, as there is going to be a huge capital investment, one has to be fair and sound enough to take the best decision. Now day’s people are more attracted towards setting up a limited liability company, let’s have a glance towards its pros and cons.


Good points of having a LLP:

  • Owners: Setting up a Limited Liablity Partnership is easy and there is no restriction on the amount of owners a firm can have. This is one of the advantages as with more partners; the amount of liability spreads out evenly.
  • Much less liability: As the name suggests, the liability incurred by the partners is to the amount of money invested by them. The partner is not liable for even a single extra penny apart from his share.
  • Tax Benefits : A partnership firm has to pay flat 30% of the tax, but a LLP has the benefits of applying AMT and pay the tax at much lesser rate.
  • Flexibility: In LLP’s there is great flexibility available to the partners as on the amount they want to invest, even there is no compulsion to attend meetings unless in case of emergency.
  • Profit Sharing: The profit earned by a LLP is shared among the partners in their respective ratio and the extra profit left is also available for the partners only.

Bad Points of a LLP:

  • Not applicable under every State Laws: Being a limited liability partnership having huge tax benefits and a complex working, some states do not allow the people to form it legally.
  • Less business credibility: It doesn’t get enough clientele and business like a company or a corporation. Often it fails and runs into losses.
  • Diverse Opinion: Working with partners brings diverse opinion and further leads to fights and ego problems leading to the downfall of a LLP.


Setting up of a LLP can be profitable or not, but before making any decision one must look into every aspect and then make a choice and work hard to make it a profitable one.

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