As we all know Private Limited Company and the Limited Liability Partnership are two separate business structures governed by two different acts namely the 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 a comparison of Private Limited Company and LLP from the viewpoint of an Entrepreneur beginning a new business.
Understand Pvt Ltd and LLP?
A Private Limited Company is a company that 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 a business where minimum of 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
|Private Limited Company
|Limited Liability Partnership
|Companies Act 2013
|Limited Liability Partnership Act, 2008|
|Minimum share capital
|Maximum 200 and Minimum 2 members||Minimum 2 members and Maximum 50 members|
|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|
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
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