What is LLP?

Also called: Limited Liability Partnership

An LLP is a business structure combining a partnership's internal flexibility with a company's limited liability, so a partner's personal assets are not at risk for the firm's debts.

It needs at least two partners with no upper limit, and at least two designated partners who must be individuals, one of them resident in India. There is no minimum capital.

Annual compliance is lighter than a company's: Form 11 by 30 May and Form 8 by 30 October. Audit is only required above ₹40 lakh turnover or ₹25 lakh contribution.

Why it matters

It is usually the right structure for a professional services firm — the liability protection of a company without a company's compliance load.

A worked example

Two consultants compare an LLP against a private limited company for a practice with ₹60,00,000 of turnover.

Illustrative figures. Your own numbers will differ — that is what the quote is for.
LLP: statutory audit	Not required below ₹40 lakh turnover — required here
Company: statutory audit	Required at any turnover
LLP: annual MCA forms	Form 8 and Form 11
Company: annual MCA forms	AOC-4, MGT-7, plus board and AGM records
LLP: can issue equity shares	No
Company: can issue equity shares	Yes

For a practice with no plan to raise investment, the LLP carries the same limited liability with materially less annual machinery. The moment external equity is on the table, the answer flips.

The statutory position

Each figure with the provision it comes from, so it can be checked.
What	Position	Source
Governing statute	Limited Liability Partnership Act 2008	Act 6 of 2009
Minimum partners	2 partners, 2 designated partners, at least one resident in India	Sections 6 and 7, LLP Act 2008
Annual filings	Form 11 by 30 May and Form 8 by 30 October	Sections 35 and 34(3), LLP Act 2008
Audit threshold	Turnover above ₹40 lakh or contribution above ₹25 lakh	Rule 24(8), LLP Rules 2009
Late filing penalty	₹100 per day per form, uncapped	Section 69, LLP Act 2008

Not to be confused with

These get used interchangeably, including by tools that should know better. They are different things.

Partnership firm

A partnership under the 1932 Act gives no limited liability — each partner's personal assets stand behind the whole of the firm's debts. An LLP is a body corporate and does.

Private limited company

A company can issue equity shares and is what investors fund. An LLP cannot, and converting later is a project rather than a form.

Questions people ask

Can an LLP take investment?

Only as partner contribution, not as equity shares. Institutional investors will not take an LLP interest, so a venture expecting to raise should incorporate as a company from the start rather than convert under time pressure.

What is the real cost of an idle LLP?

₹100 a day per form, on two forms, without any cap — and the designated partners are personally liable for it. This is the single most expensive dormancy in Indian business law.

What usually goes wrong

Not filing the LLP agreement in Form 3 within thirty days, leaving the Act's defaults in force
Missing Form 8 or Form 11 and letting the uncapped daily penalty accumulate
Choosing an LLP and then needing to raise equity
Assuming no audit applies, when the contribution threshold triggers one independently of turnover