COMPARISON BETWEEN LLP AND PRIVATE LIMITED COMPANY: –
Articles makes Comparison Between LLP And Private Limited Company which includes Registration Requirement, Directors Requirement, Statutory audit Requirement, Compliances Requirement, Investment Requirement, Fines and Penalties etc.
| BASIS | COMPANY | LLP |
|---|---|---|
| Registered under | Companies Act 2013 | Limited Liability partnership Act 2008 |
| Directors required | Minimum -2
Maximum-15 |
Minimum designated partner-2 Maximum designated partner – not applicable |
| Members required | Minimum -2
Maximum-200 |
Minimum -2 Maximum-no limit |
| Abiding | Abiding by the aoa / moa of company. | Abiding by the llp agreement |
| Statutory audit | Mandatory | Not required unless partners contribution exceeds 25 lakhs and annual turnover exceeds 40 lakhs. |
| Compliances | High legal compliances | Less legal compliances |
| Investment | Companies has to go through with sections 73 and any other provisions and rules made their under. | There is no cap or criteria for the investment by any third party. |
| Taxation | 25% for small companies | 30% LLP |
| Govt. Schemes | Many schemes are there like, Rashtriya Krishi Vikas Yojana, ASPIRE, Multiple Grant Scheme, etc
|
As such no scheme is there |
| Income | Income is company’s profit and is not taken as personal income.. | Income is personal income and is taxed accordingly. |
| Fines and Penalties | Cheaper | Higher |
Private limited companies have been in existence for longer than LLPs and enjoys widespread recognition in India and the world. Therefore, there are well established processes and procedures for Private Limited Companies. LLPs on the other hand is a recently introduced entity in India. Therefore, some of the rules, regulations and procedures are continuing to evolve.
Private limited company offers its promoters a better image or standing than that of a LLP. Private limited company also enjoys better access to funding from banks and foreign direct investment.
Due to above highlighted point, We recommend our clients for a private limited as it provides a good limelight to others. Though things are much easier than LLP but penalties are higher.
Very useful information and in very simple language.