Private Limited VS Limited Liability Partnership

A Limited Liability Partnership is a partnership in which some or all partner have limited liabilities. Limited Liability Partnership structure where each partner’s liabilities is limited to the amount they put into the business. LLP means that if the partnership fails, creditors cannot go after a partner’s personal assets or income.

A Private Limited Company is privately held business entity. It is held by private stakeholder.

As per sec 2(68) of the Companies Act 2013 defines a private company as “A Company having a minimum paid-up share capital as may be prescribed, and which by its articles, — (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred; (iii) prohibits any invitation to the public to subscribe for any securities of the company.”

PVT LTD VS LLP:

• LLP is a separate legal entity registered under the LLP Act, 2008. The partner of a LLP are not personally liable for the liabilities of the LLP. Partners have limited liability and is liable only to the extent of their contribution to the LLP.
• Private Limited Company is separate legal entity registered under Companies Act, 2013. The Director and the Shareholders of a private Limited Company are not personally liable for the liabilities of the company.
• A Pvt. Ltd. Company is required to pay a Dividend Distribution tax at the time of distribution of profit to its shareholders. Such dividend income is tax free in the hands of the shareholders.
• LLP is subjected only to Income tax. Dividend Distribution is not applicable on LLP. Once profit is declared and tax is paid by LLP, the distributed income is tax free in the hand of the partners.
• The penalty for non-compliance or late filing of documents with the MCA are most of the times higher for a LLP as flat fee of Rs.100 per day is levied. Therefore, LLPs could incur larger penalty or fines from MCA due to non-compliances. Therefore, it is important for the promoters of a LLP to be aware of the due dates and file the required documents with the registrar on time.
• In case of Private Limited Company Annual statement of accounts & annual return with ROC. These are filed in form AOC-4 and MGT-7 and in case of LLP Annual accounts and Annual return to be filed with ROC. These return are filed in LLP form-8 and LLP form-11.
• Private Limited and LLP registration, both the types of businesses are required to be registered with the Ministry of Corporate Affairs(MCA).