Private limited company vs LLP
When starting a company, one has to decide which business company they want to join and pursue. The choice of business organization is very important to give shape to your business purpose. Here, if one wants to choose between private limited company registration and LLP, one can find the advantages and differences so that one can choose what is best for them.
Private Limited Company
Companies that hold all the shares of the company privately are private companies. They can run their own business or appoint directors to manage the company on their behalf. It is a business entity that some shareholders privately run it. It restricts the owner’s liability to the extent of their shareholders and not. Hence Only for 50 of the shareholders.
- The liability of the shareholders may limit to the size of their shareholders and their personal assets are not taken to repay the debts of the company. Although this is an exception if fraud occurs in connection with the company, it denies the owner liability protection.
- There will restrict the trading of shares, which is an advantage for shareholders who do not want to sell shares to outsiders. So the risk of reducing hostility is low.
- It has a permanent succession and has an independent identity that is different from its owners or shareholders. This means that the company will continue even if members die or cease to be members. So The change of shareholders does not affect the identity of the company. It will be the same with the same offers, offers, gardens, and possessions. This will continue until you are injured under the Companies Act 2013 or any related activities.
- It is a separate law firm. This owns and owes the property and is a legal entity that can sue or sue or possess and dispose of the company’s assets. It is payable by finance and other assets. Hence It is a legal person whose property is in the company and the shareholders didn’t own it
- Some stakeholders will make shared decisions quickly and immediately. Companies Act 2013 governed this and they may require to comply with the procedures and disclosure rules under the Act.
- The Tax Income Tax Act 1961 provides companies with lower tax burdens and rates compared to other types of businesses.
- A company is a legal entity because it has the power to sue in its name and may sue others.
LLP registration is a limited liability partnership. This is a new form of business where both partnership and organization exist. Here the partnership is with limited liability. It will register under the LLP Act, 2008 and in the Ministry of Corporate Affairs
Advantages of LLP:
- LLP at any level of capital. LLP does not require minimum capital. It is set up without hassle and is not a burden to the owners.
- This requires a minimum of 2 partners and there is no limit on the maximum number of partners in the LLP.
- The cost of registering an LLP may be low compare to a company.
- All limited companies are required to audit their accounts, but there is no such requirement in the case of LLP Heather. Its contributions amount to Rs. 25 lakhs or an annual turnover of Rs. 40 lakhs.
- LLP is required to file only two, namely Annual Income and Accounts Report and Debt.
- LLP is run in parallel with the partnership. Dividend Distribution Tax Issuance LLP Deductions are allowed on interest, salary bonus commission, or any payment of wages paid to the partners under section 40 (b).
Difference between the LLP and Private Limited Co.
Requirements for compliance are Annual return filling board meetings and general meetings and Annual return filling and Statement of Account & Solvency for LLP.
The audit is compulsory While for LLP only if the contribution is more than Rs. 25 lakhs or turnover exceeds Rs. 40 Lakhs.
Procedure for Private limited company is to Obtain DSC (Digital Signature Certificate) Obtain DIN (Directors Identification Number) Name Approval Filing for Incorporation and LLP is to Obtain DSC (Digital Signature Certificate) Obtain DPIN (Designated Partner Identification Number) Name Approval Filing for Incorporation File LLP Agreement.
So the choice of a business organization depends on whether the owners are considering raising funds in India, you need to register as a company. Private companies may consider more benefits able by the investors than the LLP.