LLP v/s Pvt . Ltd.

LLP v/s Pvt. Ltd.

In this article we talk about there are many business forms which person can choose but many business owners are very curious while they are talking about Private Limited Company and Limited Liability Partnership.

So here we are trying to know what are they both forms of Businesses stands for and what points will make them different from each other.

What is Private Limited Company?

Private Company means a company having a minimum paid-up share capital of Rs. 1 Lakh or can such higher paid-up share capital:

Limit the right to transfer its shares,
Except in case of 1 person company, restricts the number of its members to 200,
Ban any invitation to the public to subscribe for any securities of the company.

Advantages of Private Limited Company:

Separate Legal entity: Private Limited Company has their own individuality in the eyes of Law. A Private Ltd. Company is a legal entity different from that of its members.
Limited Liability; The Liability of the members in Pvt. Ltd is limited up to their amount of shareholding in their company.
Easy Formation: This is also an advantage of this business form that is Registration is very easier to process.

Disadvantages of Private Limited Company:

Time Consuming: Incorporation of Private Limited Company on an average takes about 10-15 days.
Division of Ownership: It neededa minimum of 2 persons to act as directors and shareholders.

What is Limited Liability Partnership (LLP)?

Limited Liability partnership is a form of organization in which all the partners have liable up to contribution made by them in company and No partner is responsible for the act of other partner.

Advantages of Limited Liability Partnership:

Flexibility: Partnership and distribution of profits is determined by written contract between the members. It can allow huge flexibility in process.
Corporate Ownership: LLP’s may appoint two companies as members of LLP.
Protecting the name: By incorporating the LLP at Companies association you prevent another company from registering the same name.

Disadvantages of Limited Liability Partnership:

Members Dependency: An LLP should have minimum two members. If one member wants to leave the partnership the LLP can have to be dissolved.
Public Disclosure: Financial accounts have to be submitted to association for public records.

LLP v/s Pvt. Limited Company

Registered: Private Limited Co. has registered under Company Act 2013 and LLP has registered under Limited Liability partnership Act 2008.

Members: Required members as follows

Minimum: 2- Maximum: 200 (Pvt. Ltd.)
Minimum: 2- Maximum: No Limit (LLP)

Directors: As follows

Minimum: 2- Maximum: 15 (Pvt. Ltd.)
Minimum: 2- Maximum: Not applicable (LLP)

Statutory: Mandatory in Private Limited Company and Not required in LLP unless contribution exceed from 25 lakh and turnover exceed 40 Lakhs.
Private limited companies are more reliable as compared to limited liability partnership.
General meeting of shareholders should be conducted in case private limited co. once in a year but there is no such rule of meeting in LLP.
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