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Learn About the Difference Between LLP and Private Limited Company

What Is the Difference Between an LLP and a Private Limited Company?

Refer to the table to learn about the difference between Private Limited Company and LLP.

Pointers

Private Limited Company

LLP

Meaning

Private Limited Company refers to a company that is privately held for small businesses.

Limited Liability Partnership refers to a business form that offers the benefits of limited liability of a company and the flexibility of a partnership.

Governed By

The Companies Act, 2013 governs this type of business form.

The Limited Liability Partnership Act, 2008 governs this type of business form.

Number of Members

Minimum - 2, Maximum - 200

Minimum - 2, Maximum - No Cap

Number of Directors

Minimum - 2, Maximum - 15

Minimum designated partner -2, Maximum designated partner - Not applicable

Capital Requirement

No minimum share capital needed

No minimum share capital needed

Abides by

The AoA and MoA of a company

The company’s LLP agreement

Meetings Required

Minimum 4 board meetings needed in a financial year. 1 general meeting of shareholders in a year.

There is no mandate to conduct any meeting in LLP companies.

Tax Structure

Complicated (Company must pay dividend distribution tax)

Easier (This type of business need not pay dividend tax)

Statutory Audit

Required

Required if partners contribution crosses the threshold of ₹ 25 lakh and annual turnover crosses the threshold of ₹ 40 lakh

Reliability

High

Low

Compliances

Higher legal compliances

Lesser legal compliances

Investment

Companies have to follow section 73 and other provisions and rules stated in there

No cap for investment by any third-party

Company Name

Should end with Pvt. Ltd.

Should end with LLP

Foreign Ownership

Must proceed with the approval of Reserve Bank of India and Foreign Investment Promotion Board (FIPB)

Must proceed with the Automatic Approval route

The above-mentioned table focuses on the debate of Limited Liability Partnership (LLP) Vs Private Limited Company (Pvt. Ltd.). Now, let’s learn about the similarities between the two.

What Are Similarities Between LLP and Private Limited Company?

Frequently Asked Questions