The business-specific requirement is the reason businesspersons choose to select either an LLP (Limited Liability Partnership) company or a Private Limited company.
Both Private Limited Company and LLP have their features. The concept of LLP is popularising among the businesspersons day by day whereas the Private Limited company is the favourite mode of registering as a business for the startups.
So, let’s start with having a brief description of what an LLP legal entity is and what a Private Limited Company is.
What an LLP (Limited Liability Partnership) Is
In an LLP, the stakeholders and owners are called partners. For registering a company as LLP, there is no requirement like minimum capital authority or minimum share capital.
The LLP agreement is an enclosed document and it will never be available to the public. The transparency level of the LLP is low as the operation style of the company is entirely private.
For running an LLP, the minimum requirement is 2 members.
This is a brief detail of the LLP (Limited Liability Partnership).
What a Private Limited Company Is
The Private Limited Company can be registered under the Companies Act 2013. You need a minimum of Rs. One Lakh requirement as Minimum Capital requirement.
You can find the MoA ( Memorandum of Association) and AoA ( Articles of Association) of a Private Limited Company if you search it.
The transparency level of Private Limited Company is brighter if you compare it to the Limited Liability Partnership.
The number of members required for running a Private Limited Company is a minimum of 2 to a maximum of 200.
However, in comparison to LLP, there are fewer tax benefits for a Private Limited company.
There are a Few Differences Between Them too Despite Similarities
There is a constant debate among the businesspersons that what is good for business organisation structure? Is it a Private Limited Company or is it an LLP (Limited Liability Partnership) company?
Indeed, there are a few similarities between LLP and Private Limited Company but you cannot ignore the differences between them also.
So, let’s get deeper into the debate.
Let’s Start with a Comparison between LLP and Private Limited Company
The company registration process of both the LLP and Private Limited Company is almost the same.
1. The registration fee of an LLP is less if you compare it to the Private Limited Company. So, you can avail the benefit of registering your company as an LLP by spending a minimal amount of money. This facility is not available with the Private Limited Company.
2. A Private Limited Company is entitled to run with 200 shareholders only. There is nothing such as limited shareholders that is attached with the LLP or Limited Liability Partnership company. An LLP can run with as many shareholders as required for running the business.
3. Operational style and Flexibility are the two benefits of the LLP or Limited Liability Partnership. By registering a company as an LLP, you can follow the operational style of a company as well as can get the flexibility benefit of a partnership firm.
4. You have to abide by the rule even when you are arranging the meeting in a Private Limited company. In a Private Limited Company, you need to hold four Board Meetings and One General Meeting of the company.
There are no such rules and regulations associated with the LLP or Limited Liability Partnership Company.
5. The incorporation and maintenance charge of a Private Limited Company is higher in comparison with the LLP.
You can have a look at the cost that you have to spend for an LLP and a Private Limited Company.
Your spending for a Private Limited Company is
(15000 Incorporation + 15000 Compliances + 15000 Audit).
Your entire expense for a Private Limited Company is Rs. 45,000.
In comparison with the Private Limited Company, the maintenance of an LLP is
(11000 Incorporation + 4000 Compliances).
Your entire expense for an LLP is Rs. 15,000 only.
By registering your business organisation as an LLP, you can save the Rs. 15000 money for Audit purposes.
6. The requirement of Compliance for an LLP is less in comparison with the Private Limited Company.
The necessity of mandatory audit is almost nil for a Limited Liability Partnership Company unless your company’s turnover crosses the Rs. 40 lakh turnover.
So, the issue of auditing and compliance is not mandatory for the Limited Liability Partnership company.
7. For the small entrepreneurs, it is good for them to be registered as an LLP rather than being formed as a Private Limited Company.
The compliance and other expenses are high for a PLC and you may have to pay a fine of 1 lakh if you make any mistake regarding audit or Compliance.
In comparison to PLC, the fine and all-over expenses for an LLP is minimal.
So, overall, in comparison with the PLC (Private Limited Company); the LLP (Limited Liability Company) is less expensive.
The operational cost of an LLP is less than a PLC.
An LLP can take swift decisions in comparison with a PLC.
So, for small entrepreneurs, the LLP is a safer operational style.
Can You Take an Online Legal Company’s Help for Registering an LLP?
You can consult an Online Legal Company if you think handling the entire legal registering process is not your cup of tea.
The experts can take the complete responsibility of llp company registration of your business.
You do not need to rush to the Government offices for registering your company as an LLP.
The process can be executed completely online by taking support from an online legal consulting firm.
You just need to fill-up the registration form and make the LLP registration process payment on time.
You do not need to make any haste with the documents either. The online legal consulting firm will collect all the documents from you.
The most important DSC (Digital Signature Certificate) and DIN (Director Identification Number) can be collected by the online legal company.
The online legal company can execute all the work for you with the ROC (Registrars of Companies).
Thus your company is formed as the LLP (Limited Liability Partnership) company.
The online LLP company registration has made your work done in a completely hassle-free way.
It is hard to say whether an LLP is good for you or a Private Limited Company is good for you. According to experts, an LLP (Limited Liability Partnership) company is good for you if you lie in the category of small business owners, and small entrepreneurs.
You can take assistance from online legal experts or firms if you have any doubt in your mind regarding how to register an LLP or legal partnership firm and what is better for you an LLP or a Private Limited Company.
Author Name: Promit