Entrepreneurs with a view to starting a new business form a separate legal entity; they…
Difference between LLP and Private Limited Company
New entrepreneurs can either incorporate a Private Limited Company (PLC) or else register a Limited Liability Partnership (LLP). What will be more beneficial to start a PLC or an LLP following points which can help you understand the difference between the two different legal entities with limited liability.
| Sr. No. | Particulars | Private Limited Company | Limited Liability Company |
|---|---|---|---|
| 1 | INCORPORATION/ REGISTRATION/ FORMATION | Single Spiece Form Inc 32, 33 And 34. Pan And Tan Applied In The Spiece Form And Allotted With The Certificate Of Incorporation | Name Approval In Form 1. Certificate Of Incorporation In Form 2 And Llp Agreement To Be Registered In Form 3. Pan And Tan To Be Applied Seperately With Nsdl After The Certificate Of Incorporation. |
| 2 | MINIMUM NUMBER OF DIRECTORS/ DESIGNATED PARTNERS | 2 | 2 |
| 3 | MAXIMUM NUMBER OF DIRECTORS/ DESIGNATED PARTNERS/ SHAREHOLDERS | 15 And Be Increased | 200 Maximum Number Of Partners |
| 4 | PARTNERS REMUNERATIONS/ DIRECTORS REMUNERATIONS | No Restrictions | Upper Limit As Per Section 40(B) On First Rs 3,00,000 Of Book Profit Or In Case Of Loss Rs 1,50,000 Or At The Rate Of 90% Of The Book-Profit, Whichever Is More On The Balance Of Book Profit At The Rate Of 60% |
| 5 | MEETINGS | At Least 4 Meeting During A Year And Agm Once A Year | No Such Requirement |
| 6 | AUDIT | Mandatory Even If There Is No Financial Transactions Conducted | Audit Is Applicable Only In Case The Turnover Is More Than Rs. 40 Lakhs Or Contribution Of Partners Is More Than Rs. 25 Lakhs |
| 7 | COMPLIANCE | High Directors Report, Mandatory Registers, Board Meetings Annual Report And Annual Accounts | Low Annual Report And Annual Accounts |
| 8 | GOVERNING LAW | The Companies Act, 2013 | The Llp Act, 2008 |
| 9 | FUND RAISING | Preferred Over Llp | Funds Can Be Raised However Pvt Ltd Companies Are Preferred |
| 10 | SUFFIX | Private Limited Or Pvt. Ltd. | Limited Liability Partnership Or Llp |
| 11 | TAXATION | 25% Tax + 3% Cess On Tax In Case Of Sme Or Mse With Turnover Less Than 50 Crores (Refer Finance Act 2017) Or Else 30% + 3% Cess | 30% Tax + 3% Cess On Tax |
| 12 | DIVIDEND DISTRIBUTION TAX | Applicable (15% Plus Surcharge And Cess) | Not Applicable |
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