LLP

Reasons For Converting A Partnership Firm To LLP

There are plenty of reasons why many small enterprises want to become Limited Liability Partnerships (LLP). The main reason for introducing Limited Liability Partnership is to help the business run easily, while significantly minimizing the liability to the owners. Considering the various benefits of LLP, you can certainly consider converting your existing partnership firm into an llp in india. In this article, we will list some of the major advantages of converting your company to LLP.

Limited Liability for Partners

When it comes to a partnership firm, each partner is liable to the creditors. This is the reason why many individuals feel reluctant to become a partner in a partnership firm. On the other hand, the partners in the LLP have very limited liability and are not personally liable to the creditors. This gives you a great peace of mind, as you hold a partnership in a company.

Perpetual Existence

A partnership firm cannot exist if any one of the partners died or gone absent during the contract. In short, a partnership firm all the partners should be active, otherwise, the firm can get dissolved. This is not the case with LLP as it does not entirely depend on each partner. The partners in the LLP can change from time to time and it will not affect the company's daily operations.

Unlimited Partners

A partnership firm should have at least two partners and have maximum partners up to 20. But an LLP can have an unlimited number of partners.

Easy Access To Credit

Banks and lenders offer more loan options to the LLP than the partnership firm. This is because LLP firms have better governance and are subject to mandatory audits. So, banks always consider LLP have a better chance of replaying the loans.

Avenues for Growth

In the current trend, many businesses merge with other company to take the growth to a new level. Merging your firm is not possible if yours is a partnership firm. LLP can be merged with other firms.