A Limited Liability Partnership (LLP) is a partnership in which some of the partners have limited liabilities. A limited liability partnership structure is a cross hybrid between a partnership and a private limited company. The structure is highly suitable for individuals engaged in professional services. Non-resident individuals and foreign entities may also register an “LLP” but must appoint a local resident manager.
The advantage of a limited liability partnership structure is
- it is relatively low cost to operate
- has limited liability protection
- easy to closed the structure
The main disadvantage of a limited liability partnership is the tax rates are based on the personal income tax rate rather than corporate tax, which is much lower. This makes it highly tax-inefficient if your LLP falls on the higher tax brackets.
To learn more about the other differences between a Limited Liability Partnership and a Private Limited Company, please view this Comparison Chart.