Private Limited Company and Limited Liability Partnership are two different business structures governed by two different acts namely Companies Act 2013 and Limited Liability Partnership Act 2008 respectively. Both entities i.e. Pvt Ltd and Limited Liability Partnership offer many similar features required to run a small to large sized business, while there are many differences also in some aspects. In this article we will discuss comparison Pvt Ltd. vs LLP from the viewpoint of an Entrepreneur starting a new business.
What is the meaning of Pvt Ltd and LLP?
A Private Limited Company is a company which is privately held for small businesses. The liability of the members of a Private Limited Company is limited to the amount of shares respectively held by them. Shares of Private Limited Company cannot be publicly traded.
A Limited Liability Partnership means a business where minimum two members are required and there is no limit on the maximum number of members. The liability of the members of an LLP is limited.
Comparison between LLP vs Private Limited Company
LLP vs Pvt. Ltd. Co., which is better? There are few similarities as well as a few differences between both types of business organisations i.e. the Private Limited Company and Limited Liability Partnership. Let us discuss both here for better understanding:
Similarities Between Pvt Ltd and Limited Liability Partnership
Separate legal entity: Both of them have separate legal entity. That means Private Limited Company or LLP is treated as a different individual in the eyes of law.
Benefits on taxes (taxation): To the both types of business structures tax benefits are given. The tax benefits would be 30% from the profits.
Limited Liability: In case of Private Limited Company and LLP, the liabilities of the partners would be limited.
Registration Process: Pvt Ltd registration and LLP registration, Both the types of businesses are required to be registered with the Ministry of Corporate Affairs.
Advantages of Pvt Ltd and Limited Liability Partnership
The advantages of registering a business as an LLP
An LLP is easier to start and manage and the process has fewer formalities
It has a lesser cost of registration as compared to a Company
LLP is like a corporate body having its existence other than its partners
LLP can be started with any amount of minimum capital
The advantages of registering Business as a Private Limited Company
There is No Minimum Capital Requirement in the company
The members have Limited Liability
It is a Separate Legal entity
It is a different ‘person’ from the members who compose it