Partnership Deed vs. LLP Agreement

1. Partnership Deed vs. LLP Agreement: Charges and Legal Differences Starting a business in India requires choosing the right legal structure. Two popular options for small businesses and professionals are Partnership Firms and Limited Liability Partnerships (LLPs). While both have similarities, they differ significantly in terms of legal structure, liability, charges, and compliance requirements. This blog will compare a Partnership Deed and an LLP Agreement, highlighting their charges and legal differences to help you make an informed decision. What is a Partnership Deed? A Partnership Deed is a legal document that outlines the rights, responsibilities, and profit- sharing ratio among partners in a traditional Partnership Firm. It is governed by the Indian Partnership Act, 1932, and is not a separate legal entity from its partners. Key Features of a Partnership Deed: •Defines roles, responsibilities, and profit-sharing. •Can be registered but not mandatory. •Partners have unlimited liability, meaning their personal assets are at risk. •Dissolution is easier but lacks perpetual existence. What is an LLP Agreement?

2. A Limited Liability Partnership (LLP) is a separate legal entity, introduced under the LLP Act, 2008. An LLP Agreement is a contract between partners that defines their rights, duties, and obligations within the LLP structure. Key Features of an LLP Agreement: •Limited liability for partners, protecting personal assets. •Requires mandatory registration with the Ministry of Corporate Affairs (MCA). •Has perpetual succession, meaning it continues to exist despite changes in partners. •Lower compliance burden compared to private limited companies but more than a partnership firm. Charges: Partnership Deed vs. LLP Agreement Understanding the cost implications of both structures is essential. Below is a cost comparison: Charges Stamp Duty Partnership Deed Varies by state (₹500 - ₹5,000) ₹1,000 –₹2,000 (varies by state) LLP Agreement Varies by capital contribution (₹500 - ₹10,000) ₹5,000+ (MCA fees + professional charges) ₹1,000 –₹5,000 ₹5,000 –₹20,000 Registration Fees Notary Charges ₹500 –₹2,000 Professional Fees Compliance Cost ₹2,000 –₹10,000 Low (₹2,000 –₹5,000 annually) Moderate (₹5,000 –₹15,000 annually) For accurate cost estimates, consulting a CA Firm in Delhi NCR is advisable. Legal Differences: Partnership Deed vs. LLP Agreement Apart from charges, the legal structure of both forms of business differs significantly. Legal Aspects Legal Status Partnership Firm Not a separate legal entity Unlimited liability of partners Minimal (no mandatory audits) Easy, upon mutual agreement Not allowed LLP A separate legal entity Liability Limited liability for partners Compliance Annual filings & tax audits required (if turnover > ₹40 lakhs) Requires MCA approval and compliance Dissolution Foreign Investment Allowed with FDI approval Which is Better: Partnership or LLP?

3. Choosing between a Partnership Deed and an LLP Agreement depends on your business goals: •If you want low-cost setup and easy operations, a Partnership Firm is better. •If you want limited liability, scalability, and credibility, an LLP is preferable. For expert guidance on Partnership Deed Charges and LLP registration, consult a CA Firm in Delhi NCR to ensure compliance and cost efficiency. Conclusion Both Partnership Firms and LLPs have their advantages and drawbacks. While a Partnership Deed is cost-effective and easy to set up, an LLP Agreement offers limited liability and better legal protection. Understanding the charges and legal differences helps in making an informed business decision. If you need assistance in drafting and registering your Partnership deed charges or LLP Agreement, reach out to a professional CA Firm in Delhi NCR for expert advice.