LLP VS PRIVATE LIMITED COMPANY

COMPARATIVE CHART OF COMPANY VS LLP
Category Company LLP
Prevailing Law Companies are prevailed by ‘Companies Act, 2013. Limited Liability Partnership is prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made thereunder
Distinct entity Is a separate legal entity under the Companies Act, 2013. Is a separate legal entity under the Limited Liability Partnership Act, 2008.
Name of Entity Name to contain ‘Limited’ in case of Public Company or ‘Private Limited’ in case of Private Company as a suffix. Name to contain ‘Limited Liability Partnership’ or ‘LLP’ as a suffix.
Perpetual Succession It has perpetual succession and members may come and go. It has perpetual succession and partners may come and go
Charter Document Memorandum and Article of Association is the charter of the company that defines its scope of operation. LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP.
Formalities of Incorporation Various eforms along the Memorandum & Articles of Association are filled with Registrar of Companies with prescribed fees Various eforms are filled with Registrar with prescribed fees
Legal Proceedings A company is a legal entity which can sue and be sued A LLP is a legal entity can sue and be sued
Contracts with Partners/Director Restrictions on Board regarding specified contracts, in which directors are interested. Partners are free to enter into any contract.
Maintenance of Statutory Records Required to maintain books of accounts, statutory registers, minutes etc. Required to maintain books of accounts.
Maintenance of Minutes The proceedings of the meeting of the board of directors / shareholders are required to be recorded in minutes. An LLP by agreement may decide to record the proceedings of meetings of the Partners/ Designated Partners (not mandatory)
Applicability of Accounting Standards. Companies have to mandatorily comply with accounting standards Accounting standards not yet mandatory for the LLP.
Share Certificate Share Certificates are proof of ownership of shares held by the members of the Company. Ownership of the partners in the firm is evidenced by LLP Agreement.
Remuneration of Managerial Personnel for day to day administration A company can pay remuneration to its Directors subject to Sec 197. Remuneration to partner will be in terms of the  LLP Agreement.
Statutory Meetings Board Meetings and General Meetings are required to be conducted at an appropriate time. There is no provision in regard to holding of any meeting.
Formation Cost Cost of formation is higher than that of LLP Cost of formation is lesser than that of the company.
Deemed Dividend u/s 2(22)(e) Company is liable to pay tax on Deemed Dividend on the loan given to shareholders out of their accumulated profits reserves Loan Given by LLP to its partners out of its accumulated profits/ reserves is not liable to be taxed as Deemed Dividend.
Foreign Participation Foreign Nationals can be a member of a Company. Foreign Nationals can be a Partner in an LLP.
Foreign Direct Investment In case of both, company as well as LLP, the foreign direct investment (FDI) is allowed under automatic route of approval in most of the cases. However, in certain cases prior approval of the government is required. The automatic approval or the prior approval is dependent on the industrial category in which the FDI is sought. In case of the automatic route of approval, the company or the LLP need to file form FCGPR to the RBI through AD Bank after the foreign inward remittance is received. On the other hand, if the investment is not allowed through automatic approval route the prior approval of the government will be required even before the incorporation of the company or LLP.
Industrial Activity A company or LLP can be incorporated for only one industrial classification. This is also relevant from the technical point of view as in the application form for registration of a company or LLP, the applicant can choose only one industrial activity.
Number of Members 2 to 200 members in case of Private Company and Minimum 7 members in case of Public Company. Minimum 2 partners and there is no limit of a maximum number of partners.
Ownership of Assets The company independent of the members has ownership of assets The LLP independent of the partners has ownership of assets
Rights / Duties / obligation of the Partners / Managing Partners / Directors Rights /Duties/obligation of the directors are governed by AOA and resolution passed by shareholders or directors. Rights /Duties/obligation of the partners are governed by the LLP Agreement.
Liability of Partners/Members Generally limited to the amount required to be paid upon each share. Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.
Tax Liability Income of Company is Taxed at a rate of 22% Plus surcharge as applicable. Income of LLP is taxed at a Flat rate of 30% plus education cess as applicable.
Principal/Agent Relationship The directors act as agents of the company and not of the members Partners act as agents of LLP and not of the other partners.
Transfer / Inheritance of Rights Ownership is easily transferable. Regulations relating to a transfer are governed by the LLP Agreement.
Transfer of Share / Partnership rights in case of death In case of death of a member, shares are transmitted to the legal heirs. In case of death of a partner, the legal heirs have the right to get the refund of the capital contribution + share in accumulated profits, if any. Legal heirs will not become partners
Director Identification Number / Designated Partner Identification Number (DIN / DPIN) Each director is required to have a Director Identification Number before being appointed as Director of any company. Each Designated Partners is required to have a DPIN before being appointed as Designated Partner of LLP.
Digital Signature As eforms are filled electronically, at least one Director should have Digital Signatures As eforms are filled electronically, both the Designated Partner should have Digital Signatures.
Dissolution Voluntary or by order of National Company Law Tribunal. Voluntary or by order of National Company Law Tribunal.
Transferability of Interest A member can freely transfer his interest A partner can transfer his interest subject to the LLP Agreement
Admission as partner/member A person can become a member by buying shares of a company. A person can be admitted as a partner as per the LLP Agreement
Cessation as partner/member A member/shareholder can cease to be a member by selling his shares. A person can cease to be a partner as per the LLP Agreement or in absence of the same by giving 30 days prior notice to the LLP.
Requirement of Managerial Personnel for day to day administration Directors are appointed to manage the business and other statutory compliances on behalf of the members. Designated Partners are responsible for managing the day to day business and other statutory compliances.
Voting Rights Voting rights are decided as per the number of shares held by the members. Voting rights shall be as decided as per the terms of LLP Agreement.
Annual Filing Annual Financial Statement and Annual Return is required to be filed with the Registrar of Companies every year. Annual Statement of accounts and Solvency & Annual Return is required to be filed with Registrar of Companies every year.
Audit of accounts Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 2013 All LLP except for those having a turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008.
Compromise / arrangements / merger / amalgamation Companies can enter into Compromise / arrangements / merger / amalgamation LLP’s can enter into Compromise / arrangements / merger / amalgamation
Oppression and mismanagement Provisions providing for a remedy against Oppression and mismanagement exists No provision relating to redressal in case of oppression and mismanagement
Credit Worthiness of organization Due to Stringent Compliances & disclosures under various laws, Companies enjoys a high degree of creditworthiness. Will enjoy Comparatively lower creditworthiness from the company.

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