What Do You Mean by LLP?

What Do You Mean by LLP

Limited Liability Partnership (LLP) is simply a combination of the feature if a partnership and a limited liability company.

Advantages of LLP company:

a) Limited Liability. Under LLP, the partners are only liable for the amount invested in the company (capital) if the company suffers a loss.

b) Separate Legal Entity. It is a separate legal entity like a company, thus this means a LLP can own property, enter into contracts and conduct business in its own name.

c) Flexible Management. LLP is considered to have a flexible management style where the partners could manage the business by themselves or appoint a manager to operate the business on behalf of them. This allows partner to focus on their areas of expertise.

d) Need Not Be Audited. For a LLP company, there is no need to lodge the audited financial statements under normal circumstances. This help the LLP company to save costs.

e) Continuity. The company can still continue to exist and operate even if one or more partners leave the company or die.

Circumstances LLP is Suitable

a) Professional Services. LLP is suitable for professional services provider like accountants, lawyers, consultants and etc. This is because they could benefit from the flexible management feature of the LLP that allows them to focus their own areas of expertise

b) SME. LLP is suitable for SME company because this type of business entity would normally prefer to have limited liability protection for its partners. Especially in the early stage of start-up when the company has very limited resources to repay any potential losses.

Reference

Limited Liability Partnership Act 2012

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