The following table depicts various advantages of forming a Limited Liablity Partnership (LLP) over Private Limited Company.

Basis Limited Liablity Partnetship Private Limited Company
Minimum and maximum number of partners/members Minimum : 2 partners Maximum : No limit Minimum: 2 members Maximum: 200 members
Form of contribution The contribution may either be in form of cash, tangible, movable or immovable or intangible property or other benefits to the LLP. The contribution by members shall be in form of share capital only.
Registration Cost Registration cost in comparison to private company is less. In comparison to LLP registration cost is more
Audit Only LLP having turnover of Rs. 40 lakhs or more or contribution of Rs. 25 lakhs or more is required to get its accounts audited. Every private limited company irrespective of its turnover or share capital is required to get its accounts audited.
Dividend Distribution Tax (DDT) DDT is not applicable on LLP. DDT is applicable on private company
Loan to Partners or members Loan to partners is not taxable. Loan to members is treated as deemed dividend and hence chargeable to tax.
Annual Compliances In comparison to private limited company less annual compliances are required. In comparison to LLP more
Loan to Directors or partners LLP can advance loan to its partners. A private company cannot advance loan to its directors due to explicit prohibition for the same under Section 185 of Companies Act, 2013.

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June 2021