Difference between Private company and LLP
Selection of a business entity is among the primary lawful choice taken by an Entrepreneur while starting a new business. With the presentation of the Limited Liability Partnership Act and the Companies Act, 2013, more decisions of business entities are currently accessible. In this way, it is vital for the Entrepreneur or Promoter to comprehend the upsides and downsides of every one of the business elements and pick the correct one. In this article, we look at those kinds of elements viz. LLP versus Private Limited Company.
BASIS
PRIVATE COMPANY
LLP
Registration
Private Limited company will be registered with the Ministry of Corporate Affairs under the Companies Act, 2013
Limited liability partnership will be enlisted with the Ministry of Corporate Affairs under the Limited Liability Partnership Act, 2008.
Name of the Entity
The name selection and approval process is similar for private limited company and LLP. The name of the entity will end with the words “Private Limited”.
The name of the business will end with the words “Limited Liability Partnership” or “LLP”.
Legal Status of the Entity
Private Limited Company is a separate legal entity registered under the Companies Act, 2013. The Directors and Shareholders of a Private Limited Company are not personally liable for the liabilities of the Company.
LLP is a separate legal entity registered under the LLP Act, 2008.The one partner of the LLP not liable for the acts of the other partners done without consent.
Member(s) Liability
Investors have limited liability and are liable only to the extent of their share capital.
Partners have limited liability and are at liable only to the extent of their contribution to the LLP.
Minimum Number of Members
At least two people are required to start a Private Limited Company.
At least two people are required to start an LLP.
Maximum Number of Members
A Private Limited Company can only have a maximum of 200 shareholders.
A LLP can have unlimited number of Partners.
Foreign Ownership
Foreign national and foreign companies are allowed to invest in a private limited under automatic route and approval route.
Foreign national and foreign companies are permitted to invest into an LLP with prior permission from the RBI and Foreign Investment Promotion Board (FIPB) approval.
Existence or Survivability
Presence of a Private Limited Company isn’t reliant on the Directors or Shareholders. Could be would up just wilfully or by Regulatory Authorities.
Presence of a LLP isn’t reliant on the Partners could be wound up wilfully or by an Order of the Company Law Board.
Tax compliance
More Complex as far as procedural requirement
Simple Procedure as Compared to Company
Annual Statutory Meetings
Private limited company must hold a minimum of 4 Board meetings in a financial year and 1 General Meetings in a financial year.
No such requirement is needed.
Annual Filings
Private Limited Company must record Annual Accounts and Annual Return with the Registrar of Companies every year.
LLP must form 11, form 8 with MCA every year within the due dates specified under the law.
