Those individuals who enter into some sort of partnership with each other are called partners and when these partners are addressed collectively by the same name under which their business is registered, it is called a partnership firm. A partnership firm is the visible form of a partnership between two individuals who have a legal relationship between them.
The laws that help in the regulation of partnership firms in India are present under the Indian Partnership Act, 1932. This act contains the rights availed to the partners and their duties and some other legal relations between partners and any third person. Hence, this act creates a position of the partnership firm with the third parties either in contractual and legal relations that arise during the course of business of a partnership firm.
Partnership firms and Limited Liability Partnership firms (LLPs) are two quite different types of business forms with some definite differences. It is very crucial for entrepreneurs to understand the differences between Partnership firms and Limited Liability Partnership firms in order to start any sort of new business or to make changes in an existing business. In this blog, we will go through some of the main differences between partnership firms and limited liability firms along with taxation, legal status, liability, management and compliance.
The points listed below are the key features of a partnership firm:
According to the LLP Act, a limited liability partnership firm needs to get its accounts audited every single year.