Advantages and disadvantages of LLP

According to the Partnership Act 2000, it says that business relationships can be continued between the partners if they have previous business relations among them. This type of business is mainly seen in the CA, legal, interior firms, etc. Now there are some advantages of these limited liability partnerships are as follows:-

• The liability of each partner is limited which protects their assets.
• This type of business is very flexible and the profit margin or profit-sharing is mainly done by written agreement.
• This type of business acts as a legal body because it can purchase or hire any kind of labour, land, and lease any kind of machinery whenever required.

Now there are a few drawbacks or disadvantages are there:-

• For setting up this kind of business, huge documentation is needed.
• Partnership gets ended when one of the partners dies or withdraws from the business.
• Revenue has to be distributed (may not be equally) but according to the agreement during the formation of business.
• Like limited share business benefits of revenue cannot be maintained this is because it has to be kept for future tax years without any opportunity to keep over earnings.