LLP vs Pvt Ltd company – Comparison between two important forms of organization in India

Introduction

India offers various business structures for entrepreneurs to establish their businesses. Deciding for the right business structure becomes important for entrepreneurs. It affects how the business runs, handles risks, raises money, and builds trust. For the same purpose, this article differentiates elaborately to help you choose between an LLP and a Pvt Ltd Company.

What is an LLP(Limited Liability Partnership)?

An LLP (Limited Liability Partnership) is a business where partners share profits but are not personally responsible for company debts. It offers flexibility like a partnership and legal protection like a company.

Benefits of an LLP

An LLP serves the following benefits:

• Easy to start and manage with fewer formalities.
• Lower registration cost than a company.
• Exists separately from its partners.
• Continues even if a partner dies.
• Can start with minimal capital.
• Partners have limited liability.

Company Registration for an LLP

Follow these simple steps to register for an LLP:

• Get DSC: For online document signing.
• Apply for DIN: Unique ID for partners.
• Reserve Name: Submit the LLP-RUN form.
• File FiLLiP: For incorporation approval.
• Get Certificate: Proof of registration.
• File LLP Agreement: Defines partner roles.
• Apply for PAN & TAN: For taxation.
• Register for GST: If turnover exceeds the limit.
• Open Bank Account: Using LLP documents.

What is a Pvt Ltd Company?

A Pvt. Ltd. Company is a privately owned business with limited liability. It has shareholders, a legal identity, and must follow company laws. It can’t publicly trade shares like a public company.

Benefits of a Pvt Ltd Company

The Pvt Ltd Company comprises the below-mentioned advantages:

• No minimum capital is needed to start.
• Owners have limited liability.
• Company is a separate legal entity.
• It continues even if owners change.
• Easy to raise funds.

Company Registration for a Pvt Ltd Company

These easy steps can help you to register your Pvt Ltd Company without any issue:

• Get DSC : Required for online document signing.
• Apply for DIN : Unique ID for directors.
• Reserve Name : Submit SPICe+ Part A.
• File SPICe+ Form : For incorporation approval.
• Get Certificate : Proof of registration.
• Draft MOA & AOA : Defines company rules.
• Apply for PAN & TAN : For taxation.
• Register for GST : If turnover exceeds the limit.
• Open Bank Account : Using company documents.