Why the LLP is a better option

The LLP as a better option. The statement is largely correct: an LLP keeps the main strength of each older form and drops its main weakness.

1. Against a partnership:
   • Risk to the partners: each partner's liability stops at the contribution he has agreed to bring (except in wilful fraud), while a firm's partners are liable without limit, up to their personal assets; and a partner binds the LLP by his own acts but does not bind the other partners.
   • Continuity: partners may come and go but the LLP itself goes on, unlike a firm, whose existence is affected by such changes.
   • Compliance: only the designated partners answer for compliance and penalties under the Act, not every partner.
2. Against a private company or an unlisted public company: an LLP gives the benefit of limited liability at a low cost of compliance, and its partners organise its internal structure by their own mutual agreement, as in a partnership.
3. Who gains most: because its structure and operation are flexible, the LLP suits small enterprises, professionals and service businesses, and investment by venture capital.