What is Company?
A company is a legal entity formed by one or more individuals to engage in and operate a business. Company means an artificial person incorporated under Companies Act, 2013. After incorporation, company becomes a legal entity (separate entity) which means that company is separate from its members. A company may be organised in various ways for tax and financial liability purposes, depending on the laws of the jurisdiction where it is formed.
Companies can have a variety of different structures, from single-owner sole proprietorships to large corporations with many shareholders. Companies can be either public or private and must generally be registered on the state level. A company has many of the same legal rights and responsibilities as a person does, such as the ability to enter into contracts, borrow money, pay taxes, own assets, sue (or be sued), and hire employees.
What is Limited Liability Partnership (LLP)?
A LLP is a form of general partnership where each partner’s liability is limited. Partners are not held liable/responsible for the wrongful acts of other partners but may still be liable for contractual obligations, depending on the regulations of the state.
In other words, a limited liability partnership (LLP) is a flexible legal and tax entity where every partner has a limited personal liability for the debts or claims of the partnership.
Having business partners means spreading risk, leveraging individual skills and expertise, and establishing a division of labor. Having business partners means spreading risk, leveraging individual skills and expertise, and establishing a division of labor.
What is Partnership?
A partnership is the relation between two or more that allows them to carry the business according to their agreement or partnership deed. Those partners share the ownership and profits, but they also share the work, responsibility, and potential losses. Partners may contribute capital, labor, skills, and experience to the business. They may have unlimited legal liability for the actions of the partnership and its partners.
A partnership can even start without an oral or written contract.Where there is a written contract between the partners, it is called a partnership agreement. The partners agree on the purpose of the partnership and their rights and responsibilities.
Comparison between Company, Partnership and LLP
| Basis | Company | LLP | Partnership |
| Meaning | It is an artificial person incorporated under companies act. | It is a partnership made by two or more persons with limited liability. | It is the relation between persons who have agreed to share profits and loss of business carried by all. |
| Define | Section 2(56) of Companies Act, 2013 | Section 2 of LLP Act, 2008 | Section 4 of Indian Partnership Act, 1932 |
| Liability | Limited | Limited | Unlimited |
| Registration | Compulsory | Compulsory | Optional |
| Creation | Created by law | Created by law | Created by contract |
| Separate Entity | It has separate legal entity | It has Separate entity | Does not have separate entity |
| Charter Document | Memorandum of Association and Article of Association | LLP Agreement | Partnership Deed |
| Perpetual Succession | It has perpetual succession and members come and go | It has perpetual succession and members/partners may come and go | It does not have perpetual succession as this depends on the will of partners |
| Common Seal | Have common seal | also have common seal | no concept of common seal |
| Legal Proceedings | Company can sue or be sued | LLP can sue or be sued | Only Registered partnership can sue third party and third party can sued the firm irrespective of registration |
| No. of members | Private: Min. 2 & Max. 200 Public: Min. 7 and Max. unlimited | Min. 2 and Max. unlimited | Min. 2 and Max 20 |
| Principal/Agent relationship | Directors are agents to company and not to others | Partners are agents to LLP and not to others | Partners are agents to partnership and also to other partners |
| Identification No. | Directors must have DIN | Partners must have DPIN | Not required |
| Dissolution | Voluntary or by the order of National Company Law Tribunal | Voluntary or by the order of National Company Law Tribunal | By agreement, insolvency, court orders, mutual consent, certain contingencies |
| Admission of member | A person can be admitted by buying shares | A person can be admitted as partner as per LLP agreement | A person can become partner as per deed |
