LLP and Private Limited Company are two popular forms of Business registrations in India. Both of these business structures are very similar in nature and simultaneously they both are substantially different from each other.
Let’s compare both of the Business forms to understand which business form is suitable for whom.
BASIS |
LLP |
PRIVATE LIMITED COMPANY |
Applicable Law |
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Membership |
Minimum – 2 |
Minimum – 2 |
No. of Directors/Designated Partners |
Minimum Designated Partners – 2 |
Minimum Directors – 2 |
Minimum Paid-up Share Capital |
Not Applicable |
No Minimum Requirement is prescribed |
Minimum Authorized Share Capital |
Not Applicable |
Rs. 1Lakh |
Separate ownership & Management |
In LLP, owners and managers both are the same persons that are partners. |
In Pvt. Ltd., shareholders hold the ownership while Directors of the company hold the power of management. |
Recognition |
Less popularity and recognition |
More popularity and recognition |
Board Meetings |
Not Applicable |
Minimum 4 Board Meetings during a Financial Year |
Obligation of Statutory audit |
Not mandatory unless total capital exceeds Rs.25 Lac or total turnover exceeds Rs.40 lac |
Always Mandatory |
Statutory Compliances |
Comparatively low |
Comparatively high |
Transferability of Shares |
Not allowed. Partners can transfer their share by executing contract |
Allowed |
External Funding |
Very difficult to raise external funding |
Easy external funding through different modes like giving shareholding to others |
Conclusively, we can say that
LLP is suitable for those who are looking for following points |
Private Limited is suitable for those who are looking for following points |
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Click Here to read more on LLP Registration Process in India
Click Here to read more on Private Limited Company Registration
In case of any further query contact your Trustworthy Advisors Manthan Experts at +91-9643-969-969.
Knowledge Source:
Conversion of LLP into Private Limited Company
LLP Registration Process in India
Procedure For Incorporation Of Private Limited Company Using SPICe+