Different between Private limited company or LLP

different-between-private-limited-company-or-llp

Different between Private limited company or LLP 

You all already know about Limited Liability Partnership (LLP) and Private Limited Company. Today we will discuss which is better between Limited Liability Partnership and Private Limited Company. And another bonus tip is that you should use Private Limited Company for any business and Limited Liability Partnership Registration for any business.

Shareholder or member

In case of limited liability partnership, the minimum shareholders can be two and there is no maximum limit. But in case of a private limited company, the minimum number of shareholders should be two and the maximum number of shareholders may be 200. This is in the case of a Benefit Point Limited Liability Partnership.

Compliance (Tax and audit)

The cost of a limited liability partnership is not as high as that of a private limited company, but the cost is higher than that of a partnership. Limited liability partnership If the turnover is more than 40 lakhs then audit is required for limited liability registration. If the capital is above Rs 25 lakh, it becomes compulsory for an LLP company to be audited. But in the case of a private limited company, it is compulsory to audit the private limited company even if it is running in transover or capital loss. In case of a private limited company, all the compliance has to be met. This is compulsory in the case of a private limited company. This is a benefit in case of limited liability partnership registration.

Liability for partnership

Limited Liability Partnership and Private Limited Company are both liability limited. This means that if a loan is taken in the name of the company and the loan cannot be repaid by the company, then only the bank can repay the bank's money by auctioning the company's assets, no shareholder can sell personal assets, except the company's assets. With this there is no joint liability.

Example of joint liability: In this limited liability partnership and private limited company, if a shareholder has 40% share in the registered companies, his liability is not 70% or it can be said that the liability of the shareholder will be the same as the share percentage.


Management documents

Limited liability Partnership (LLP)

In LLP there is only one agreement and that is exactly how the company will run, here you do not have to do as much as in a private limited company.

Private Limited Company

In a private limited company you have to submit a lot of documents, here you need documents like Memorandum of Association (MoA), articles of association (AoA, called articles of incorporation in some jurisdictions) and a shareholder agreement which says what are the responsibilities of the shareholders? 

Owner and management

Owner and management is the same in case of limited liability partnership. But in the case of a private limited company, the owner and management are different. If Owners are A, B, C then Management is X, Y, Z. Private Limited Company is a Proper Structure Organization. For any investor, invest in a private limited company.

Stock exchange

If you ever need to invest in the future, the limited liability partnership will not be able to register on the stock exchange. But private limited companies can register on the stock exchange. This is in the case of a Benefit Private Limited Company.

Bonus Tips:

Limited liability partnership

If you want to start working with a professional partner and do not want to make a lot of compliance's. Because the cost with compliance's is high, you should definitely register LLP.

Private Limited Company

If you want to give your company a proper structure, you should definitely register a private limited company. The benefit of this is that they have limited liability in the Limited Liability Partnership but in a private limited company a proprietor shareholder agreement comes, if you want to give your employee a stock option you can give another. In the future, if you want to list your company on a stock exchange, you can do that which you cannot do in a limited liability partnership.

You can contact us if you want to know more about Limited Liability Partnership and Private Limited Company.

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