Sample Essay
The limited liability companies are well known, however a new phenomenon has occurred which related to the limited liability partnerships. The limited liability partnerships are essentially a hybrid version of partnerships having the qualities of limited liability as for the limited liability companies. The nature of the limited liability partnership is such that it allows the organization to be flexible and have the tax benefits of a partnerships but the liability of the owners is reduced as per the limited liability construct.
NS Pandey presents many advantages and benefits of a limited liability partnership. These pertain to the no limit for the number of partners in the firm, flexibility of developing a structure much like the traditional partnerships, less formal requirements, less documentation and paperwork as it does not require a memorandum of association. Other benefits of an LLP include the fact that the income is taxed only once base don the income of the partners; no corporation tax is applicable thus reducing the number of times tax is cut. Moreover the liability of the partners is significantly reduces as opposed to a partnership and is kept limited to the stake that they have invested in the business in the form of capital investments. “The main reason of forming such type of organizational structure is to fill the gap between the companies and the partnership. It is an alternate corporate business vehicle that provides the benefit of the limited liability along with flexibility of the organizational structure which is basically based on the mutually arrived agreement. Moreover, there are no restrictions on professionals of any field on forming an LLP. But such LLPs should be within the ambit of the legislation.” (Pandey, 2008)
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