Comparison of Pvt Limited Company and LLP

Comparison of Pvt  Limited Company and LLP

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Parameters Private Company Limited Liability Partnership
Incorporation / Registration
Incorporated under provisions of Companies Act, 2013 Incorporated under provision of LLP Act, 2008
Minimum number of owners
2 shareholders required
2 Partners required
Minimum Number of Directors / Designated Partners
2 Directors required
2 Designated Partners required
Maximum number of owners
200 is the maximum number of shareholders allowed
No such limit. An LLP can have any number of partners
Capital Requirements
No Minimum capital requirements
No Minimum capital requirements
Cost of Registration
Cost of Registration depends on Authorised Capital
Less when compared to Company
Liability of Owners
Limited to the unpaid amount of shares taken in the company
Limited to the agreed contribution
Duration of Business
Continue until winding up under Companies Act.
Continue until winding up under LLP Act.
Changes in the ownership
Company will continue irrespective of changes in the ownership or management
LLP will continue irrespective of changes in the ownership
Ownership of property
All assets and liabilities owned by the company
All assets and liabilities owned by the LLP
Withdrawal of Capital
Once paid up, capital cannot be withdrawn by shareholders without the approval of court. Company can buy back the shares subject to Companies Act. Partners can withdraw capital subject to LLP agreement. It is also possible for a partner to reduce contribution liability after giving notice to creditors
Interest on capital
Interest on capital can be claimed only for infrastructure company etc. and subject to central government permission. LLP can provide interest on capital without any approval subject to LLP Agreement.
Termination of ownership A shareholder (member) can terminate membership by transferring the shares in his name to any person subject to conditions in Articles of the company. A shareholder cannot resign from the company. A partner continues as a partner in the LLP even after transferring all his rights in the LLP unless LLP agreement provides otherwise. A partner can even resign from the LLP.
Removal from the ownership It is not possible to remove a shareholder from the company by others. It is possible to remove a partner from the LLP subject to the LLP agreement.
Directors / Designated Porters A director need not be a shareholder. Designated Partner should be a partner in LLP.
Management Management of Company is vested with Board of Directors elected by shareholders LLP is managed by partners as per LLP agreement. Partners can delegate management power to a management team or single partner
Meetings for Decisions Operational decisions are taken at Directors meeting and directors are required to meet once in every quarter and General meeting of shareholders to be conducted once in a year mandatorily. No such requirements of meetings. Decision process as per LLP Agreement.
Remuneration Directors can take remuneration. No restriction in Companies Act Working partners can take remuneration subject to LLP agreement
Permanent Account Number (PAN) Company is required to have a separate PAN other than Shareholder or Director LLP is required to have a separate PAN other than partners
Tax Rate Corporate tax is applicable to limited company @ 32.445% on net profit of the company ‘Firm’ tax is applicable to LLP @ 30.90% on net profit of the company.
Dividend Distribution Tax (DDT) Profit if distributed as Dividend, it will attract Dividend Distribution Tax (DDT) @16.45% Profit after tax will be credited to partners’ account and it will not be taxable in the hands of partners again.
Tax Filings Required to file Tax returns every year. In case of no business, a ‘NIL’ return is required to be filed. Required to file Tax returns every year. In case of no business, a ‘NIL’ return is required to be filed.
Accounts Accounts to be maintained with all supporting documents Accounts to be maintained with all supporting documents
Audit Requirements Accounts to be Audited by a Chartered Accountant whether the company does any business not. Accounts to be Audited by a Chartered Accountant only if the turnover exceeds Rs.40 Lakhs or contribution exceeds Rs.25 Lakhs.
Registers and Records Limited Company is required to maintain lot of Registers, Records and to keep Minutes of Board Meetings and General Meetings from time to time irrespective of doing business or not. LLP is not required to maintain any Registers, Records and Minutes unless specifically mandated by LLP agreement. Partners are at liberty decide the requirements.
Annual and Event based Filings Company is required to file certain statutory returns annually and other filings based on certain events from time to time irrespective of doing business or not. LLP is required to file certain statutory returns annually and other filings based on certain events from time to time irrespective of doing business or not.