The document compares and contrasts private limited companies and limited liability partnerships (LLPs) in India. It discusses the process for incorporation, fees, capital requirements, ownership structures, flexibility in ownership transfers, taxation, statutory compliance requirements, funding options, and procedures for each entity type. The conclusion is that a private limited company is generally better suited for businesses expecting future funding from foreign direct investment, foreign institutional investors, venture capital or employee stock ownership plans, as these options are more flexible or only allowed for private companies compared to LLPs.

1. - A Distinct Comparison
- By Sahana.G and Co.,
Ph No: 099642-18244

2. LLP
 Obtain DSC
 Obtain DIN/DPIN
 Obtain Name Approval
from MCA
 Filing documents such as
MOA , AOA for
incorporation
 Obtaining the
incorporation certificate
 Obtain DSC
 Obtain DIN
 Obtain Name Approval
from MCA
 Filing documents such as
MOA , AOA for
incorporation
 Obtaining the
incorporation certificate
Pvt Ltd Co

3. LLP
 Incorporation Fees and
stamp duty payable to
MCA will be approx
8,000/- ( For Capital
infusion of 1 Lakh )
 Stamp duty varies
depending on the amount
of capital contribution
 No Minimum Capital
contribution limit
 Incorporation Fees and
stamp duty payable to
MCA will be approx
12,000/- ( For Capital
infusion of 1 Lakh )
 MCA fee varies depending
on the amount of capital
contribution
 Minimum capital required
here is 1,00,000/-
Pvt Ltd Co

4. LLP
 Separate Legal Entity
 No clear distinction between
owners and management
 Partners can be owners as
well as managers
 No Maximum Limit for
number of partners
 Less flexibility when it comes
to transferring or sharing of
ownership as approval from
all the existing partners is
required
 Separate Legal Entity
 Clear distinction between
owners and management
 Shareholders /Owners do
not necessarily have to
have management powers.
 Maximum number of
shareholders shall be 200
 More flexibility when it
comes to transferring or
sharing of ownership
Pvt Ltd Co

5. LLP
 Tax Compliances are
similar
 Statutory Audit is not
compulsory until LLP
reaches the turnover of 40
Lacs and Capital of 25 lacs
 Penalty for non filing of
annual returns with MCA
is higher compared to a
Company. Rs.100 flat fee is
levied per day from the
date of non-compliance
 Tax Compliances are
similar
 Statutory Audit is
compulsory from date of
inception itself
 Penalty for non filing of
annual returns with
MCA is lesser compared
to a LLP. It depends on
the Authorized Capital
Pvt Ltd Co

6. LLP
 Only Approval route of
FDI ( Prior approval of
RBI ) is permissible.
 Relatively new concept.
Rules , regulations and
procedures are yet to
evolve
 Both automatic ( Prior
Approval not required )
and approval routes of
FDI is allowed. Better
access of funding from
banks also
 Widespread recognition
in India. Well
established procedures
Pvt Ltd Co

7.  Registration Process is similar
 Tax rates and compliances( MAT in case of company and AMT in case of LLP )
are similar
 Statutory Audit is not compulsory for LLP
 FDI under automatic route is not permissible in LLP.
 Venture capital funding and ESOPs also not allowed in LLP
 Conversion procedures from LLP to Pvt Ltd Co is still in its infancy. Yet to
evolve.
 In LLP there is no concept of dividend distribution tax. Whereas, for a Private
Limited Company, dividends are taxed at 16% when it is declared to
shareholders
 In LLP, there is no concept of Board Meetings or Annual General Meetings.
 Transfer of Ownership requires permission of all partners in LLP whereas
shareholders do not require any permission

8. If a person has expansion plans in future and expecting
funding in future through FDI, FII, Venture Capital, ESOP
etc., it is better to opt for a Private Limited company with
a slightly higher cost and dividend tax ( Again cost
depends on the Authorized capital of the company ).

9. By Sahana.G and Co,
Chartered Accountants
Firm Reg No : 015931S