Any two persons can start a LLP, but there is no limit of partners in Limited Liability Partnerships.There are several advantages & disadvantages of Limited Liability Partnerships which are Advantages of LImited Liability Partnerships.
Disadvantages of Limited Liability Partnerships:
1. Easy to formulate: Limited Liability Partnership is quite easy to form as it has minimum legal requirement & has lower registration cost.
2. Liability is Limited: All partners have a limited liability in accordance with the capital invested by them in business.
3. Perpetual succession: Partnership have a legal perpetual succession as it does not affect by the life of its partners.
4. Flexibility: partners receive a lot of flexibility with an LLP. As partners decide contribution to the operations of the business.
5. Difficulty in Raising Capital: People don't consider it a credible business and do not want to invest in this type of limited partnerships.
6. Lack of Recognition: It is not recognized by the people & faces several restrictions.
7. Huge penalties: Limited Liability partnerships are required to pay huge penalties for non-compliance with the procedural matters.
8. No Protection against internal negligence: if something happens with a limited liability partnership which violates rules, regulations or laws, then the employee involved isn’t held responsible for the outcome. The partnership operating the LLP receives the blame itself. Thus they cause the LLP to lose its LLP status.
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