Difference between LLP and Private Limited Company

| | , ,

As we all know Private Limited Company and Limited Liability Partnership are two separate business structures governed by two different acts namely Companies Act 2013 and Limited Liability Partnership Act 2008 individually. Both entities i.e. LLP and Private Limited Company grant many similar features needed to run a small to large-sized business, while there are many differences also in some aspects. In this article, we will explain comparison Private Limited Company and LLP from the viewpoint of an Entrepreneur beginning a new business.

Understand about Pvt Ltd and LLP?

A Private Limited Company is a company which is privately held for small enterprises. The liability of the members of a Private Limited Company is restricted to the number of shares respectively held by them. Shares of Pvt Ltd cannot be publicly traded.

A Limited Liability Partnership considers as a business where minimum two members are needed and there is no limit on the maximum number of members. The liability of the members of a Limited liability partnership is limited.

Comparison between Pvt and Limited Liability Partnership

There are various similarities as well as differences between both types of business organisations i.e. the Private Limited Company and Limited Liability Partnership. Let us review both here for better understanding:

Pvt Ltd Vs LLP

Particulars

 

Private Limited Company

 

Limited Liability Partnership

 

Law Appropriate

 

Companies Act 2013

 

Limited Liability Partnership Act, 2008
Minimum share capital

 

Not Required

 

Not Required

 

Members Required

 

Maximum 200 and Minimum 2 members Minimum 2 members and Maximum 50 members
Directors required

 

Minimum 2 and Maximum 15

 

Minimum 2 Designated partners and Maximum not applicable
Transferability of shares

 

 

It can only be restricted by Article of association

 

Can be transferred by executing agreement before a notary public
Statutory Audit Mandatory  

Not Mandatory

 

 

Benefits of Pvt Ltd and Limited Liability Partnership

 The benefits of registering a business as an LLP

  • An LLP is easier to begin and manage and the process has fewer formalities
  • It has a minor cost of registration as compared to a Company
  • LLP is like a corporate body having its presence other than its partners
  • LLP can be started with any measure of minimum capital

 The benefits of registering Business as a Private Limited Company

  • There is No Minimum Capital needed in the company
  • The members have Limited Liability
  • It is a Separate Legal entity
  • It is a distinct ‘person’ from the members who compose it

The Lok Sabha has passed the new Reforms for Companies (Amendment) Bill 2020  

Also, require any other guidance with respect to Company Formation please feel free to contact our business advisors at 8881-069-069.

Download E-Startup Mobile App and never miss the latest updates relating to your business.

 

 

 

 

 

Previous

CBDT Notification on Tolerance Range for Wholesale Trading for AY 2020-21

GST on Cement

Next

Leave a Comment