Major Difference Between Private Limited and LLP Company in India

You need to know the difference between Private Limited and LLP Company in India if you want to start a business sector over here.  Entrepreneurs have the chance to form two modern forms of organizations. But first things first, and it starts off with registration procedure. It is mandatory to get some clear ideas on private limited company registration procedure or that of an LLP firm. Once you are through with the legalities of the registration, you can start planning for your all-new venture in the business world in India.

 

Start it off with registration:

The LLP and Private Limited registration procedures are quite similar with some basic differences in forms and documents. The steps to be addressed while registering for the Private Limited Company are listed for your reference.

• You have to procure Digital Signature Certificate for proposed directors. After that, you need DIN for proposed directors and name approval from MCA. 
• Next stop, you need to fill for incorporation.

The basic steps are similar for the LLP firms too. Let’s just learn a bit more about its registration.

• Procure DSC for proposed partners and procure DIN or DPIN for the partners, as well.
• After that, you need to get name approval from MCA, just like with the private limited companies.
• For the last step, just fill for incorporation.

Both these firms are registered with Ministry of Corporate Affairs and they have to get Certificate of Incorporation. The processing time might vary a bit and it will take on an average of around 20 days for incorporating.

Advantages of LLP:

Before you head for LLP Company in India, it is time to get a clear idea of its advantages.  LLP Registration is a new form of business for corporate and partnerships to exist side by side. It is solely registered under LLP Act 2008 and also under the Ministry of Corporate Affairs.

• LLP is formed based on the capital amount. You don’t have to worry about LLB over here.
• It takes around 2 partners for setting things up without any limit on maximum partner numbers of LLP.
• The LLP registration cost is somewhat low when compared to another firm.
• Other limited companies have to get their accounts audited but that is not required for the LLP.
• LLP needs to file two options under Annual returns and statements of accounts and solvency

 

Advantages of private limited:

Once you are through with the basic limited companies and services, it is time to go for the private limited companies now. These companies are able to capture and maintain shares privately. They are able to operate businesses all by themselves and get to hire directors for managing companies on their behalf.

• The liability of private limited shareholders is only limited to extent of shareholding personal assets, and are not taken for repaying company’s debts.
• You will come across restricted trades of sharers, which is also an advantage to shareholders not willing to sell shares to outsiders. 
• This forms a separate legal entity, with its own liability and assets.  Some shareholders are available to take quick and prompt decisions. These are solely governed by Companies Act 2013, where the norms and procedures are followed well. 

Get down to compliances:

In terms of private limited and LLP, the tax compliances are more or less same. But, when it is about compliance relating to Ministry of Corporate Affairs, LLP is known to have some advantages over limited liability company registration anytime.

• LLP will not have to get the accounts audited in case the annual turnover is less than 40 lakhs rupees and capital contribution falls below the mark of 25 lakhs rupees. 
• On the other hand, you have the private limited firms, which are cordially invited and asked to file annual returns audited based financial statements within the Ministry of Corporate Affairs on a yearly basis.

 

For the penalties and fines:

The penalty associated with the non-compliance or the late filings of the documents are most of the time higher for LLP with a flat fee of 100 bucks on a daily basis. It is mostly levied whenever the non-compliance continues without the cap on liability. So, LLP is known to incur higher penalty prices or fines from MCA because of the non-compliance.