Private Limited Company vs LLP 2024

Private Limited Company vs LLP

Private Limited Company vs LLP There are many commercial enterprise systems in India from which an entrepreneur can pick to establish an enterprise or business enterprise. Private constrained businesses and Limited Liability partnerships (llps) are two such business structures. Private Limited Company vs LLP A private limited company has existed in India for a long term. 


Limited liability partnership (llp) commercial enterprise shape was introduced in India in 2008. For that reason, pvt ltd companies have existed longer than llps and loved large popularity. Llp and pvt ltd companies have comparable capabilities, however there are many differences also. This text discusses llp vs pvt ltd business enterprise.


Features of pvt ltd Company

Private Limited Company vs LLP Not less than  members should establish a private limited company. A pvt ltd company is a privately held business that can have a maximum of 2 hundred members. There may be no minimum capital requirement, and simplest 2 directors are required to set up the company. The participants have Limited liability at the time of loss or closure of the enterprise. They’re constrained to the quantity of stocks held by them. Private Limited Company vs LLP It is appropriate for corporations which have a huge turnover and need external funding.


Features of llp

At the very least  partners set up a confined Limited liability partnership (llp) through a settlement. There’s no minimal capital requirement to set up an llp. The liability of the contributors/partners is restrained to the extent of their contributions to the llp. Private Limited Company vs LLP Every accomplice is accountable for their very own acts, and they’re not chargeable for the acts of other partners. The partners control the enterprise. Llp is appropriate for startups, traders, and small to medium-sized organisations that don’t require plenty of external funding.


LLP v/s Pvt Ltd Advantages and Disadvantages


The advantages of registering a enterprise as an llp are as follows:


  • An llp is less complicated to start and control as it has fewer formalities.
  • It has a lesser cost of registration in comparison to business enterprise registration fees.
  • It’s a corporate body having a separate felony lifestyle from its companions.
  • The demise of a partner does not now have an effect on the life of the llp. It has perpetual succession.
  • It could be started out with a minimum quantity of capital.
  • The partners have Limited liability.


The Disadvantages of an llp are as follows:


  • The penalty for non-compliance through an llp is heavy.
  • If the range of companions is going below 2, i.E. If there’s the simplest one partner, the llp can be dissolved.
  • It’s hard to raise budget/capital from undertaking capitalists (vc), equity investment or angel investors on account that they couldn’t be the shareholders of the llp.


The Advantages of registering a enterprise as a Pvt ltd Company are as follows:


  • There’s no minimum paid-up capital requirement to establish a Pvt ltd Company.
  • The corporation contributors have confined legal responsibility.
  • It has a separate felony entity from its members.
  • It has perpetual succession.
  • It is able to improve the budget without difficulty.


The Disadvantages of a Pvt ltd Company are as follows:


  • The participants of a Pvt ltd Company are confined to 200.
  • It restricts the transfer of stocks of its participants.
  • It can not issue a prospectus inviting the general public to join the organisation shares.


Difference Between Pvt Ltd Company and LLP


Knowing the solution to LLP vs Pvt Ltd Company – which is higher, will assist an entrepreneur recognize the 2 commercial enterprise structures under. Private Limited Company vs LLP Underneath listed are the differences between an llp and a pvt ltd company. 


LLP vs Pvt ltd registration method


The registration procedure of llp and pvt ltd corporation is similar with a few differences. The llp is registered with the ministry of corporate affairs (mca) as in step with the limited legal responsibility partnership act, 2008. Private Limited Company vs LLP The pvt ltd company  is registered with the mca beneath the company act, 2013. The llp and pvt ltd company registration utility is filed with the registrar of Company (roc) at the mca portal.


The special companions of the llp should acquire the Designated Partner identification number (DPIN) to sign up the llp. Private Limited Company vs LLP The directors of a corporation ought to reap the director identification number (din) to check in a pvt ltd company. Private Limited Company vs LLP The llp needs to file the fillip shape to register the llp, at the same time as the pvt ltd organisation needs to record the spice + form to sign in the agency. The name of an llp ought to contain the phrase ‘llp’, even as the call of a pvt ltd company needs to quit with – ‘pvt. Ltd’.


The governing file of an llp is the llp agreement entered between the companions. The llp agreement is registered with mca, but it isn’t a public report. Private Limited Company vs LLP An enterprise’s governing documents are the memorandum of Association (moa) and article of Association (aoa). The moa and aoa are public documents. As a consequence, a 3rd celebration can acquire them by way of paying prescribed charges to the mca.


The government price for llp incorporation is considerably low compared to the authorities rate for pvt ltd organisation incorporation. Private Limited Company vs LLP The files that must be notarised and published on non-judicial stamp paper are much less for an llp registration when in comparison to a pvt ltd company registration.


LLP v/s Pvt Ltd Possession


There may be no clear distinction between the control and proprietors in an llp. The partners are the llp proprietors and control the llp enterprise. A companion in an llp is a manager and a proprietor, even as in a pvt ltd enterprise, the proprietors, i.E. Shareholders no longer have managerial powers.


In a Pvt ltd company, the management is different from the Partners. Private Limited Company vs LLP  The board of directors control the enterprise business. For the reason that shareholders do not immediately participate in the business enterprise control, there is a difference among the owners and management. Private Limited Company vs LLP The stocks of a pvt ltd company can’t be publicly traded for the reason that aoa restricts it. But, the shares may be transferred without problems.


LLP vs Pvt Ltd Membership and Directors


There need to be a minimum of two designated partners in an llp. Private Limited Company vs LLP There is no restriction on the most variety of companions. There are no administrators in an llp. In a pvt ltd business enterprise, the minimum number of members is two, and the most is two hundred. There must be not less than two directors in a pvt ltd business enterprise, and the maximum is restrained to fifteen.


LLP v/s Pvt Ltd Compliance


An llp does not ought to conduct board conferences or an annual fashionable meeting (agm) for the reason that owners manipulate the enterprise. Due to the fact that administrators manage a pvt ltd business enterprise, they must behave at the least four board meetings each year. It should additionally conduct an agm within six months of the cease of the monetary 12 months.


The statutory audit isn’t obligatory for an llp. An llp should get its accounts audited while its annual turnover exceeds rs.Forty lakhs and the capital contribution exceeds rs.25 lakhs. The statutory audit is obligatory for a pvt ltd business enterprise, irrespective of its turnover.


Private Limited Company vs LLP An llp must record the declaration of account and solvency and annual returns with the roc in Form 8 llp and form 11 llp, respectively. A pvt ltd organisation should document its annual monetary statements and annual go back with the roc in form aoc 4 and mgt 7, respectively.


LLP v/s Pvt Ltd Funding


LLPs face limitations in raising funds from Venture Capitalists (VCs) or angel investors due to the requirement for investors to become partners in the LLP. However, they can still secure investments from financial institutions like banks. In contrast, Pvt Ltd companies have the flexibility to attract funding from VCs and angel investors by issuing shares to them .Private Limited Company vs LLP  This makes Pvt Ltd companies a more suitable option for fast-growing businesses seeking capital infusion from external investors.


LLP v/s Pvt Ltd FDI


Private Limited Company vs LLP Foreign Direct Investment (FDI) is permissible for LLPs under specific conditions. However, foreigners can invest in an LLP only after obtaining prior approval from the Reserve Bank of India (RBI) and the Foreign Investment Promotion Board (FIPB). Private Limited Company vs LLP On the other hand, FDI in Pvt Ltd companies is allowed under the automatic route in most sectors, but it may also require approval depending on the sector.


LLP v/s Pvt Ltd Taxation


            An LLP is subject to a fixed rate tax of 30% on its total income. However, when               the total income surpasses Rs.1 crore, a surcharge of 12% is added to the income tax amount. On the other hand, Pvt Ltd companies face different tax rates based on their annual revenue. If the company earns less than When a Pvt Ltd company earns less than Rs. 400 crores, it should pay a tax of 25%. However, when the annual revenue exceeds Rs.400 crores, the tax rate increases to 30%. Additionally, Pvt Ltd companies have the option to choose between the new tax rates of 22% for existing companies and 15% for new companies.

An LLP and Pvt Ltd company share many similarities, but they differ in several key aspects. For entrepreneurs seeking external funding and aiming for significant turnover, a Pvt Ltd company is the ideal business structure. On the other hand, when two or more individuals want to establish and operate a business in partnership by contributing capital, the LLP structure is preferable over a traditional partnership firm. This is because an LLP offers numerous benefits to its partners, including limited liability, perpetual succession, and a separate legal entity.




Here’s a comparison between LLP and Private Limited Company based on various criteria:

BASIS LLP Private Limited Company
Registered under Limited Liability Partnership Act 2008 Companies Act 2013
Directors required Minimum: 2<br>Maximum: 15<br>Minimum designated partner: 2<br>Maximum designated partner: Not applicable Minimum: 2<br>Maximum: No limit
Members required Minimum: 2<br>Maximum: 200 Minimum: 2<br>Maximum: No limit
Minimum capital required No minimum share capital required No minimum share capital required
Meetings Minimum 4 board meetings required during financial year with 120 days gap between 2 meetings. General meeting of shareholders to be conducted once a year mandatorily. No requirement of partners meeting in LLP. Abiding by the AoA/MoA of the company
Abiding Abiding by the LLP agreement Abiding by the AoA/MoA of the company
Statutory audit Mandatory Not required unless partners’ contribution exceeds 25 lakhs and annual turnover exceeds 40 lakhs
Compliances High legal compliances Less legal compliances
Tax structure More complicated (dividend distribution tax has to be paid by the company) Much easier (no dividend distribution tax)
Reliability More confidential Less reliable investment
Investment Companies has to go Through with section 73 and any other provisions and rules made their under There is no cap or criteria for the investment by any third Party

This comparison showcases the differences between LLP and Private Limited Company across various aspects.

Open chat
Scan the code
Can we help you?