Why limited liability partnership (LLP) matters to a first-time founder
An LLP lets a few partners run a business with flexible profit sharing and decision rights, while the LLP itself, not the partners, owes its debts. Tax differs by country: in the UK the partners pay tax on their profit shares, while an Indian LLP pays tax itself. With no shares to sell, it rarely suits founders who plan to raise equity.
Examples of limited liability partnership (LLP)
Two consultants in Manchester register an LLP at Companies House and sign an LLP agreement setting out profit shares and voting. The LLP signs client contracts in its own name. In India, the same pair would register with the Ministry of Corporate Affairs and appoint designated partners to handle filings.
Common misunderstanding
An LLP is not an informal partnership with automatic protection, nor a limited company with shares. Liability can still arise from a partner’s own wrongful act, fraud or personal guarantees. Each country has its own LLP law, so rules for a UK LLP do not carry over to an Indian one.
When to use it
Consider an LLP for a professional or service business owned by a few partners who want limited liability and flexible profit sharing. If you plan to raise equity investment, compare it with a limited company first. Put partner rights and duties in a written agreement and take local professional advice before registering.