LLP vs Partnership
A side-by-side comparison of Limited Liability Partnership and Partnership Firm — cost, timeline, liability, compliance, taxation, and which one is right for you in 2026.
The short answer
Choose LLP for limited liability and a separate legal identity — almost always the better choice today. Choose a traditional Partnership Firm only if you want the absolute simplest setup and accept unlimited personal liability.
| Criteria | LLP | Partnership |
|---|---|---|
| Professional fee (from) | ₹8,999 | ₹5,999 |
| Govt. fees | ₹2,000–₹5,000 | ₹500–₹2,000 (stamp duty) |
| Timeline | 12–18 working days | 10–15 working days |
| Liability | Limited to contribution | Unlimited — partners personally liable |
| People required | 2 designated partners | 2 partners |
| Raise equity funding? | No equity funding (partners only) | No equity funding |
| Compliance burden | Medium — annual return + statement of accounts | Low — no mandatory ROC filings |
| Taxation | Flat 30% on profits, no dividend tax | Flat 30% on profits |
| Credibility | High for professional firms | Moderate |
| Conversion | Can convert to Pvt Ltd | Can convert to LLP or Pvt Ltd |
Limited Liability Partnership
Best for: Professional service firms, consultancies, CA/legal/architecture practices with 2+ partners
Pros
- Flexible profit sharing
- No minimum capital
- Limited liability protection
- Lower compliance than Pvt Ltd — no audit below ₹40L turnover
Cons
- Cannot raise VC equity funding
- Foreign investment restricted in some sectors
- Less brand credibility vs Pvt Ltd
Partnership Firm
Best for: Small local businesses and family partnerships that want simplicity over protection
Pros
- Very quick to set up
- No mandatory ROC compliance
- Simple profit sharing via deed
- Low cost
Cons
- Unlimited personal liability of partners
- Cannot raise VC funding
- Dissolves if a partner exits
- Lower credibility
LLP vs Partnership — FAQs
What is the main difference between LLP and Partnership?
Limited Liability Partnership: Professional service firms, consultancies, CA/legal/architecture practices with 2+ partners. Partnership Firm: Small local businesses and family partnerships that want simplicity over protection. Choose LLP for limited liability and a separate legal identity — almost always the better choice today. Choose a traditional Partnership Firm only if you want the absolute simplest setup and accept unlimited personal liability.
Which is cheaper to register — LLP or Partnership?
LLP starts at ₹8,999 and Partnership starts at ₹5,999 (professional fees, government fees extra at actuals).
Which has lower compliance — LLP or Partnership?
LLP compliance is medium — annual return + statement of accounts. Partnership compliance is low — no mandatory roc filings.
Can LLP raise funding?
LLP: No equity funding (partners only). Partnership: No equity funding.
Still not sure which one to pick?
Take our free 2-minute quiz, or talk to a CA — we'll recommend the right structure for your situation.