LLP vs Partnership
The definition of a partnership has now been expanded due to the various sub-forms created to suit the needs of those who engage in legal businesses. There is an LLP or limited liability partnership. Another one is the LP, or limited partnership, and the last one, perhaps the most common, is your standard partnership or general partnership (GP).
A partnership is described as an arrangement between two or more parties wherein each party agrees to certain terms and works hand in hand (co-labor) for the advancement of their mutual objectives and interests. The people or firms involved in a partnership are termed as business partners. Whether their joint venture succeeds or fails will depend highly on their combined efforts.
An LLP is, as the name implies, given limited liabilities to one, a few, or all of the business partners. As such, an LLP shares characteristics of both a corporation and a plain partnership. No wonder it has been known as a hybrid of a partnership and a company. In an LLP, one partner cannot be held liable for the other one’s failure or misconduct. This shields him from his partner’s wrong decision-making or business choices. Not all countries have the same terms for an LLP, but many practice an LLP having at least one partner being given unlimited liability like in the case of a general partner.
LLPs are advantageous in the sense that they can still continue with the business regardless of possible partner changes. They can also hold properties under their own given name because they are independent entities in themselves and are separate from their individual partners. With this, they practice perpetual succession. These are some of the LLP’s most noticeable differences from a standard partnership because the latter refers to its partners as “the firm” itself and doesn’t observe succession in perpetuity.
Moreover, standard partnership firms can purchase titles under their member partners’ names and not the name of the firm itself. All partners are also held liable to the rest of the partners, a characteristic of unlimited liability.
Summary:
1.LLPs observe perpetual succession unlike in standard partnerships.
2.In an LLP, the firm is separate or independent from its individual partners while in a general partnership, all partners are collectively referred to as “the firm” itself.
3.The LLP can have one or more of its partners with limited liability as opposed to a partnership wherein all partners have unlimited liability – they are liable for the actions of all other member partners.