Question

Why is a limited liability company’s popular to form, other than being tax like a partnership? explain

Answer 1

Limited liability partnership will always have an additional clause that one partner will always be responsible for bearing with all the liabilities of the firm, even if the liabilities of other partners are limited but in case of limited liability Company, there is no such obligation on the personal level of shareholders of the company.

Limited liability company is also popular because it will have a significant advantage of raising of the capital as a company because it can raise capital from different additional means but limited liability partnership firm will always be Limited in raising of the capital and they are not having access to capital markets and other forms of Markets and they will be having a very low amount of capital inflow into their firm whereas limited liability company will always have a benefit of expansion, but limited liability firm will be not having that benefit of expansion.

limited liability company can also be owned by more than one individual whereas limited liability firm does not have that benefit and limited liability company are also having a significant advantage in case of Corporate taxation.

So, limited liability company is a better form of organisation than the limited liability partnership or other structural form, so it is having a large amount of attraction.