What is the full form of LLP
LLP: Limited Liability Partnership
LLP stands for Limited Liability partnership. LLP is a mix of a traditional partnership, and a company as some of its features are similar to a traditional partnership and some matches with a company. For example, it provides the flexibility of a traditional partnership firm and benefit of limited liability of a company at a low compliance cost, which means, in an LLP, the members have the flexibility of organizing their internal management on the basis of a mutually arrived agreement, like a partnership firm, and also the partners have limited liability where each partner's liability is limited to the amount they put into the business, which means no one can touch their personal property if the firm incurs losses.
Furthermore, in an LLP, one partner is not responsible or liable for other partner's negligence, misconduct or wrongdoing. So, it a hybrid between a company and a partnership. Whereas, in some countries, an LLP is required to have at least one "General Partner" with unlimited liability.
In the companies, where the liability is unlimited, the personal assets of the partners can be sold out to compensate the losses or to pay the dues. To overcome this limitation, the Government came with the act LLP2008, which came into effect on 1 April 2009. So, LLP is a legal entity as it has to be registered with Registrars of Companies (ROC) and is governed by LLP Act 2008.
Features/Advantages of the LLP:
Furthermore, it is less costly to start an LLP, and easy to wind up as it requires less legal formalities, and also the partners cannot be held responsible for other partners' misdeeds, frauds, etc.