Private Limited Company Registration Vs LLP Registration

 Private Limited Company Registration


Any person desirous of setting up a business in India has many options like Proprietorship, partnership, Private Limited Company Registration and LLP registration.

 

Further, foreign company registration in India can be done under unincorporated form in the manner of branch office, liaison office and project office.

 

Also, foreign company registration in India under incorporated form can be done in the form of subsidiary company registration in India, Joint Ventures and LLP registration.




 

Both Private Limited Company and Limited Liability Partnership are two different entities governed by the two different acts namely Companies Act 2013 and Limited Liability Partnership Act 2008 respectively. 

 

In this article, we will make a comparison between Private Limited Company Registration and LLP registration

A private limited company structure is most popular and widely used form of entity registration in India. It is preferable because this structure keeps the liability of the members limited to their share in the capital. A private limited company is best for that person or layman who is looking to raise capital from outside sources or wants an inflow of foreign remittance. A Private Limited Company has to be registered with the Registrar of Companies (ROC). When it completes the registration process, a copy of the Certificate of Incorporation (COI) is issued to them. All the registration process is to be done online and all the documents have to be submitted online. The name of the entity will end with the words “Private Limited Company”.

ADVANTAGES OF PRIVATE LIMITED COMPANY: –

1.      The company has a separate legal entity from its members

2.      The liability of shareholders in the case of a private limited company is limited.

3.       It enjoys a brand or reputation as compared to proprietorship or partnership

4.       It has lower tax rate as compared to LLP or partnership.

5.      It has perpetual succession and independent identity which means the company never lose their identity after the death of its shareholders.

6.       It is quite suitable for funding from investors like venture capital, private equity investor, angel investor etc

7.      Formation of a private limited company is online and quite an easy process

8.      No minimum capital is required for the formation of a private limited company.

LLP is best for consultancy, professional, legal, and advisory firms with no need for equity funding. It’s been gaining in popularity from the very beginning because it combines some of the better aspects of partnership firms and private limited companies. The liability of the members of an LLP is limited.. The Government fee for incorporation of an LLP is significantly cheaper when compared to the Government fee for incorporation of a Private Limited Company. The name of the entity will end with the words “Limited Liability Partnership” or “LLP”.

ADVANTAGES OF LIMITED LIABILITY PARTNERSHIP: –

1.      Formation of LLP requires lesser time, effort and has minimal legal compliances.

2.      LLP is not required to pay dividends to its partners so Dividend Distribution Tax is not applicable on LLP.

3.      It has its own existence in the eyes of law.

4.      Statutory audit is not required unless the partner's contribution exceeds 25 lakhs and annual turnover exceeds 40 lakhs of the business.

5.      No meeting requirement of partners in LLP.

6.       The share of profits received from LLP is exempted in the hands of partners.

Thus, Private limited company registration as well as LLP registration has its own pros and cons and one must make decision based on its business requirement

and long term vision

Location: India

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