Difference Between Limited Liability Partnership and Private Limited Company
A Private Limited and LLP are both different forms of business entities. Both the business entities are similar in some nature, while they also differ in many areas and aspects.
These both forms of entities are the common pillars which an entrepreneur might decide to choose one to establish his business.
Below table illustrates more difference between an LLP and Private Limited
Particulars | Limited Liability Partnership | Private Limited Company |
Meaning | LLP is an alternate corporate business form in which some or all partners have limited liability. | A company having a minimum paid-up share capital as may be prescribed, and which by its articles, - • restricts the rights to transfer its shares; • except in case of One Person Company, limits the number of its members to two hundred; • prohibits any invitation to the public to subscribe for any securities of the company;
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Suffix in the name. | The name of the company has to end with LLP. | The name of the company has to end with PVT. Ltd. |
Members | There are partners in LLP. | There are members in Private Limited. |
Applicable law | Limited Liability Partnership Act, 2008. | Companies Act,2013. |
Registered with | Registered with LLP registration. | Registered with ROC, (Registrar of Company) |
Identification number | Director Identification Number (DIN) | Designated Partner Identification Number (DPIN) |
Taxability | LLP is taxed @ 30% + surcharge and cess | Private Limited is taxed @ 30% + surcharge and cess |
Taxation | To pay tax on income earned and alternate minimum tax. | To pay tax on income earned, dividend distribution tax and alternate minimum tax. |
Voting Rights | Voting rights depend on the terms of LLP agreement. | Voting rights depend on the basis of the number of shares a shareholder holds. |
Legal Status | Separate legal entity under LLP act. | Separate legal entity under Companies Act. |
Liability | Limited | Limited |
Members Liability | The partners are not personally liable for the liabilities of the Company. | The directors or members are not personally liable for the liabilities of the company. |
Number of members | Minimum 2 Maximum unlimited | Minimum 2 Maximum 200 |
Transferability | Ownership can be transferred | Ownership can be transferred by way of share transfer. |
Charter Documents | LLP Agreement | Memorandum of Association and Article of Association. |
Annual statutory meetings. | No requirement to conduct annual statutory meetings. | Board and General Meetings must be conducted periodically. |
Filing of Annual Returns | LLP must file Annual Statement of Accounts and Solvency and Annual Return with the Registrar each year. Income Tax Return must also be filed for the LLP. | Private Limited Company must file Annual Accounts and Annual Return with ROC each year. Income Tax Return must also be filed for the Private Limited Company. |
Foreign Direct Investment | Foreigners are allowed to invest in LLP only with prior approval of RBI. | Foreigners are allowed to invest in Private Limited Company under the approval of Automatic route. |
Compliance | Not compulsory to audit if the turnover is less than 40 lakhs. | Compulsory to audit its accounts annually and file the same with the Ministry of Corporate Affairs. |
Fines and penalties | The penalty for non-compliance or late filing of documents is Rs. 100 per day. | Penalty as fixed by the tax by the Ministry of Corporate Affairs. |
