LLP Vs Private limited company – Comparison between two important forms of organization in India

Comparison between LLP vs Private Limited Company

Private Limited Company and Limited Liability Partnership are two different business structures governed by two different acts namely Companies Act 2013 and Limited Liability Partnership Act 2008 respectively. Both entities i.e. Pvt Ltd and Limited Liability Partnership offer numerous analogous features needed to run a small to large-sized business, while there are numerous differences also in some aspects. In this article, we will discuss the comparison of Pvt Ltd. vs LLP from the viewpoint of an Entrepreneur starting a new business.

What’s the meaning of Pvt Ltd and LLP?
A Private Limited Company is a company that’s privately held for small businesses. The liability of the members of a Private Limited Company is limited to the number of shares respectively held by them. Shares of Private Limited Company can not be publicly traded.

A Limited Liability Partnership means a business where a minimum of two members are needed and there’s no limit on the maximum number of members. The liability of the members of an LLP is limited.

Comparison between LLP vs Private Limited Company
LLP vs Pvt. Ltd.Co., which is better? There are a few similarities as well as a few differences between both types of business organizations i.e. the Private Limited Company and Limited Liability Partnership. Let us discuss both then for a better understanding
Similarities Between Pvt Ltd and Limited Liability Partnership
Separate legal entity Both of them have separate legal entities. That means Private Limited Company or LLP is treated as a different individual in the eyes of law.

Benefits on taxes (taxation) To both types of business structures tax benefits are given. The tax benefits would be 30 of the profits.
Limited Liability In the case of Private Limited Company and LLP, the liabilities of the partners would be limited.
Registration Process Pvt Ltd registration and LLP registration, Both types of businesses are needed to be registered with the Ministry of Corporate Affairs.

Advantages of Pvt Ltd and Limited Liability Partnership
The advantages of registering a business as an LLP
An LLP is easier to start and manage and the process has fewer formalities
It has a lesser cost of registration as compared to a Company
LLP is like a corporate body having its existence other than its partners
LLP can be started with any amount of minimum capital
The advantages of registering Business as a Private Limited Company
There’s No Minimum Capital Requirement in the company
The members have Limited Liability
It’s a Separate Legal entity
It’s a different person ’from the members who compose it

Suggested Read from IConnect: Advantages of Private Limited Company Registration

Pvt. Ltd.Co. and LLP have a lot of similarities yet they both are different in many of their characteristics and structures. However, a Private Limited Company is a perfect business structure for you, If you’re an entrepreneur who needs external funding and is aiming towards good turnover. While in case you’re further than one person who wishes to start the business together with limited liability then Limited Liability Partnership is for you. I Connect Financial Solutions provides the best LLP Registration Services in Pune and Private Limited Company registration in Pune.


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