April 06, 2017 by Tejaswi Kumar Singh
The Choice between Limited Liability Partnership and Sole Proprietorship is not that difficult. LLP is a hybrid form of business structure compared to the conventional sole proprietorship structure.
| Particulars | Limited Liability Partnership | Sole Proprietorship |
| Liability | The partners have a limited liability which extends to the amount of capital contributed | The Proprietor has an unlimited liability which extends to the amount of his/her personal estate. |
| Act | Limited Liability Partnership Act,2008 governs the provisions and compliances of an LLP, failing which penalties are imposed. | There is no separate Act or laws which govern or define the compliance requirements. |
| Audit | Compulsory audit required if LLP crosses 40 lakhs turnover or 25 lakhs capital contribution | There is no compulsory audit requirement. |
| Name | There is no exclusivity of the name. Anyone can register a sole proprietorship with the same name having the same business in a different state. | There is exclusivity of the name. No one can apply for the same name in any other act |
| Tax Computation | An LLP has to pay flat 30% as income tax on the income generated | A sole proprietorship can use the slab rates while computing their income tax. |
| Growth prospects | An LLP can expand by opening branch offices in different states. | A sole proprietorship can only expand if it registers the same individually in different states |
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