Difference between LLP & PVT LTD COMPANY in India
Every entrepreneurship journey starts with the registration of a business entity. Clearing this step is the first and most important part in this journey. The Government of India has provided several options in the types of business entities among which a person can choose the best suitable type of company that will help in achieving the goal. In this article, we will be learning the most important points of differentiation between a Limited Liability Partnership firm registration and a Private Limited Company Registration. Read these points and decide which business structure will be best suited for your enterprise.
Before diving into the main part, let us first look at the definitions and features of a Company Registration in India and an LLP Company registration:
What is PVT LTD COMPANY REGISTRATION IN INDIA?
Private limited company registration is a business entity that consists of a minimum of 2 and a maximum of 200 members. These structures have limited liability and only distribute shares to their members. Because it is not a public business, it is not permitted to sell its shares on the open market.
Businesses that have registration of Private Limited Company exist as separate legal entities. This means they have the same rights as individuals to possess property, be sued, and pursue legal action. A Private Limited Company can stay small because a minimum of two shareholders or directors are required for its incorporation. It is important to note that the directors and shareholders can be the same in case of private limited company registration in India. Due to the limited liability nature of the corporation, PLC owners have protection for their personal assets.
Once shares are allocated to its members or owners, such members are unable to freely transfer shares among themselves. This safeguards the way shares are distributed. If the members agree, the company can continue to exist indefinitely. The articles of association of a Private Limited Company, like those of an LLC (limited liability corporation), allow for additional rules and regulations to be imposed as the members deem fit.
FEATURES of Private Limited Company Registration Online:
– It has its own legal status.
– Two directors and two shareholders are required for Private Limited company incorporation.
– Its members’ liability is limited.
– Members cannot freely transfer their allotted shares.
– Enjoys a sense of continuity in his or her existence.
– The transfer of shares may be limited by the Articles of Association, preventing any unwanted individuals from becoming shareholders.
WHAT IS LIMITED LIABILITY PARTNERSHIP REGISTRATION?
An LLP Company registration is a hybrid structure that combines the partnership with the limited liability company. When it comes to arranging the management portion of their organization, partnership businesses have more freedom, while LLCs have liability protection. Both of these features benefit an LLP incorporation.
An LLP registration online can be completed with as few as two partners, and the company is treated as a separate legal entity. There is no minimum requirement for the capital investments of members. A capital contribution is the amount of money invested in a business by a member or partner for the first time. To control the operation of the firm, LLPs form partnership agreements. Other corporate forms and law firms can easily convert to an LLP if they so desire.
FEATURES of LLP Company Registration Online:
– A Limited Liability Partnership Firm has a distinct legal entity.
– It is necessary to have a minimum of two partners.
– Minimum limit for capital contribution requirement- No limit.
– The partners’ mutual rights and obligations are controlled by an agreement between the partners or between LLP and its partners.
Hope the above differentiation points between a Company registration and an LLP firm registration are clear. So now, let us look at the major difference between LLP & Pvt Ltd Company registration:
LLP VS PVT LTD COMPANY- WHICH IS BETTER??
Here are the major differences between an LLP vs Pvt Ltd Company registration:
|BASIS||Private Limited 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 – NA
|Capital Requirement||No minimum share capital is required.||No minimum capital contribution is required.|
|Abiding||MOA AND AOA||PARTNERSHIP DEED|
|Salary||No limit on Director||Limit on partners|
|Reliability||More Reliable||Less Reliable|
|Compliance||Audit Extra||No Audit upto a turnover of INR 40 Lakh or contribution of upto INR 25 Lakh|
|Penalty||Comparatively Less penalty in case of non-filing of any form.||Higher Penalty in case of non-filing of any form|