Act Comparison
Partnership Firm vs LLP
A partnership firm under the Indian Partnership Act, 1932 carries unlimited liability, is not a separate legal entity, and dissolves when a partner dies or exits. An LLP under the LLP Act, 2008 limits each partner's liability to their contribution, is a separate legal entity with perpetual succession, and must file Form 8 and Form 11 with the MCA every year.
| Aspect | Partnership Firm | LLP |
|---|---|---|
| Governing Law | Indian Partnership Act, 1932 | LLP Act, 2008 |
| Registration | Optional (but recommended) | Mandatory with MCA |
| Limited Liability | No — unlimited liability | Yes — limited to contribution |
| Legal Entity | Not a separate legal entity | Separate legal entity |
| Minimum Partners | 2 | 2 Designated Partners |
| Annual Compliance | Minimal (IT return only) | Form 8 + Form 11 with MCA |
| Perpetual Succession | No — dissolves on death/exit | Yes |
| Suitable For | Very small, informal businesses | Professional firms, growing businesses |