Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is basically a new kind of corporate framework, which combines the flexibility involved in a partnership and the benefits of limited liability of an entity at a compliance price that is very low. Thus, it offers the advantages of limited liability of an entity and also permits its members to organize their internal management based on a mutual agreement, like in the case of a partnership entity.
The structural flexibility as well as operation of Limited Liability Partnership makes it ideal for the SME enterprises and also for service sector organizations. Globally, Limited Liability Partnerships are the business’s preferred vehicle, especially for service based industry and also for activities that involves professionals. In a Limited Liability Partnership, one particular partner isn’t liable or responsible for the other partner’s negligence or misconduct.
Benefits of Limited Liability Partnership
The management of a Limited Liability Partnership is done as per the agreement of LLP. The partners’ liability is limited to the contribution that they are willing to make. In addition to this, all the partners are safeguarded from the joint liability that another partner creates owing to his/her wrongful decisions and negligence. There are several advantages of an LLP.
- It is a popular business form that has been accepted across the world when compared to Company.
- The cost of forming and LLP is very low.
- An LLP is easy to run and manage.
- An LLP is easy to establish.
- There is no restriction in an LLP when it comes to number of partners.
- An LLP does not require any minimum capital to be contributed by the partners.
- One partner is not responsible for the act of the other partner.
- An LLP does not have to follow too many compliance related guidelines.
- An LLP isn’t required to maintain too many statutory related records.
- In an LLP, the personal assets of a partner are not exposed, except in fraud related cases.
- There is minimal intervention from the government in an LLP.
- An LLP is easy to wind-up or dissolve.
- An act of one partner, without informing the other, may end up binding the Limited Liability Partnership.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
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Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
- Accounts Payable Turnover Ratio
- Debt Service Coverage Ratio
- Solvency Ratio
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