When it comes to personal liability for the debts and obligations of a business, there is a significant difference between a proprietorship and an LLP. In a proprietorship, the proprietor is personally liable for all debts and obligations of the business. This means that if the business is unable to pay its debts or faces legal action, the proprietor's personal assets are at risk.
After the LLP Agreement is prepared, the name of the LLP needs to be reserved using the RUN-LLP facility on the Ministry of Corporate Affairs (MCA) website. Once the name is reserved, the incorporation documents such as the LLP Agreement, Form-2, and Form-3 need to be filed with the Registrar of Companies (RoC) within 60 days.
After filing the incorporation documents, the RoC will review and approve them, and a Certificate of Incorporation will be issued. Once the LLP is registered, the proprietorship firm will be dissolved, and all its assets and liabilities will be transferred to the LLP.