The ‘limited liability business’ is a hybrid of corporate structures and partnership structures.
There are a few basis of a limited liability company :
- Perpetual succession : It means that the member of the company may die, retire or become insolvent but it will not affect the company as the members of the company do not affect the existence of the company.
- Separate legal entity : Company existence is distinct from the existence of it’s members.
Different types of limited liability business :
1. Partnership.
2. Sole proprietorship.
Limited Liability partnership : LLP comes under the categories of limited liability business. Hence it has separate legal entity. It also contains the hybrid function of both a corporate structure and partnership structure. In this the members can become partners only when :
a) They are declared to be in a sound state of mind form court.
b) He is discharged insolvent.
c) He has not applied to be addicted as an insolvent.
Every LLP must contain the word ‘Limited Liability partnership’ and the acronym LLP.
- Every LLP most have at least two partners. If partners become less than two for more then 6 months then the liability of the single partner becomes unlimited.
a) The main purpose of LLP is to earn profit.
b.) They are liable for limited contribution in the LLP. - Partnership : It means when two or more person who agreed to share the profit in the business. The maximum numbers of partners in a partnership firm are at least 100 and minimum numbers of a partner in a partnership.
- Corporation : There are two types of company that come under this category:
a) Private Limited company : Private Limited company’s are owned by and governed by the private individuals . In case of private company their is no minimum paid up capital required. The minimum numbers of members are 2 and the maximum number of members is 200 (excluding the present present employees ). An OPC and small company also comes under these categories. - b) Sole proprietorship : When a individuals wants to start, the single member is the owner of his own business. Sole proprietorship is the easiest type of business to form. It is usually open by the proprietorship on small scale business map.
