LLP Destination
LLP vs Partnership vs Private Company Back
Compare Your Form: LLP Vs

Category Private Company LLP
Commercial Aspects
Limited Liability Liability limited to the amount required to be paid up on each share Limited to the extent of contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner
Perpetual Succession It has perpetual succession and members may come and go It has perpetual succession and partners may come and go
Separate Legal Entity Separate legal entity under the Companies Act, 1956. Separate legal entity under the LLP Act, 2008.
Agency The directors act as agents of the company and not of the members Partners act as agents of LLP and not of the other partners
Administrative Aspects
Number of partners 2 to 50 members in case of Private Company Minimum 2 partners, no limitation of maximum number of partners
Governing Law Companies are governed by the Companies Act, 1956 LLPs are governed by the LLP Act, 2008 and various rules made there under
Regulatory Compliances There are various requirements of holding statutory meetings or maintaining statutory records There is no requirement of holding any statutory meeting or maintaining statutory records except for books of accounts
Audit of Accounts Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 1956. LLPs are required to get their accounts audited as per LLP Rules only when the turnover or contribution is greater than Rs.40 Lacs or Rs.25 Lacs respectively
Taxation Aspects and Capital Requirement
Taxability Income of Company is taxed at a Flat rate of 30% Plus surcharge plus education cess as applicable. Income of LLP is taxed at a flat rate of 30% plus education cess as applicable.
MAT Companies need to pay MAT on their book profits as applicable LLP is required to pay AMT as applicable. However the net taxability in case of LLPs is less compared to that of MAT in private companies
DDT Companies need to pay DDT on distribution of profits DDT is not applicable to LLPs
Capital Contribution Private company should have a minimum paid up capital of Rs. 1 lakh No explicit requirement of any minimum capital contribution
Withdrawal of Capital Withdrawal of Capital difficult Withdrawal of Capital allowed
Procedural Aspects
Registration Registration is required with Registrar of Companies (ROC) Registration is required with Registrar of LLP
Agreement/Document Memorandum and Articles of Association defines the scope of operation and rights and duties of the directors LLP Agreement denotes its scope of operation and rights and duties of the partners vis-a-vis LLP
Time Frame for Formation Total Minimum Time Period - 15-20 days Total Minimum Time Period - 10-15 days
Foreign participation
Foreign Participation Foreign Nationals can be a member in a Company Foreign Nationals can be a Partner in a LLP, subject to certain restrictions and conditions
Others
Legal Identity A company is a legal entity which can sue and be sued A LLP is a legal entity can sue and be sued
Flexibility Flexibility to shareholders as they can come and go anytime Unlike partnership, LLP has flexibility, partners may come and go anytime
Financing A company, being a more regulated entity is preferred by banks to lend money A LLP being a more regulated entity is preferred by banks to lend money
Category Partnership Private Company LLP
Commercial Aspects
Limited Liability Liability of partners is unlimited and may extend even to their personal assets. Partners are severally and jointly liable for actions of other partners and the firm Liability limited to the amount required to be paid up on each share Limited to the extent of contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner
Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and members may come and go It has perpetual succession and partners may come and go
Separate Legal Entity Not a separate legal entity Separate legal entity under the Companies Act, 1956. Separate legal entity under the LLP Act, 2008.
Agency Partners are agents of the firm and other partners The directors act as agents of the company and not of the members Partners act as agents of LLP and not of the other partners
Administrative Aspects
Number of partners Minimum 2 and Maximum 20 (10 in case of banking business) 2 to 50 members in case of Private Company Minimum 2 partners, no limitation of maximum number of partners
Governing Law Partnership is governed by the Partnership Act, 1932 Companies are governed by the Companies Act, 1956 LLPs are governed by the LLP Act, 2008 and various rules made there under
Regulatory Compliances There is no requirement of holding any statutory meetings/maintaining statutory records There are various requirements of holding statutory meetings or maintaining statutory records There is no requirement of holding any statutory meeting or maintaining statutory records except for books of accounts
Audit of Accounts Partnership firms are required to have tax audit of their accounts as per the provisions of the Income Tax Act Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 1956. LLPs are required to get their accounts audited as per LLP Rules only when the turnover or contribution is greater than Rs.40 Lacs or Rs.25 Lacs respectively
Taxation Aspects and Capital Requirement
Taxability Income of Partnership is taxed at a Flat rate of 30% plus education cess as applicable. Income of Company is taxed at a Flat rate of 30% Plus surcharge plus education cess as applicable. Income of LLP is taxed at a flat rate of 30% plus education cess as applicable.
MAT MAT is not applicable to partnerships Companies need to pay MAT on their book profits as applicable LLP is required to pay AMT as applicable. However the net taxability in case of LLPs is less compared to that of MAT in private companies
DDT DDT is not applicable to partnerships Companies need to pay DDT on distribution of profits DDT is not applicable to LLPs
Capital Contribution Not Specified Private company should have a minimum paid up capital of Rs. 1 lakh No explicit requirement of any minimum capital contribution
Withdrawal of Capital Withdrawal of Capital allowed Withdrawal of Capital difficult Withdrawal of Capital allowed
Procedural Aspects
Registration Registration is optional Registration is required with Registrar of Companies (ROC) Registration is required with Registrar of LLP
Agreement/Document Partnership Deed describes the rights and duties of the partners Memorandum and Articles of Association defines the scope of operation and rights and duties of the directors LLP Agreement denotes its scope of operation and rights and duties of the partners vis-a-vis LLP
Time Frame for Formation It takes about a week to incorporate a partnership firm Total Minimum Time Period - 15-20 days Total Minimum Time Period - 10-15 days
Foreign participation
Foreign Participation Foreign Nationals cannot form Partnership Firm in India Foreign Nationals can be a member in a Company Foreign Nationals can be a Partner in a LLP, subject to certain restrictions and conditions
Others
Legal Identity Only registered partnership can sue third party A company is a legal entity which can sue and be sued A LLP is a legal entity can sue and be sued
Flexibility Gets dissolved on the death of any partner unless provided otherwise in the partnership deed Flexibility to shareholders as they can come and go anytime Unlike partnership, LLP has flexibility, partners may come and go anytime
Financing Obtaining financing is difficult for a partnership firm A company, being a more regulated entity is preferred by banks to lend money A LLP being a more regulated entity is preferred by banks to lend money
Category Partnership LLP
Commercial Aspects
Limited Liability Liability of partners is unlimited and may extend even to their personal assets. Partners are severally and jointly liable for actions of other partners and the firm Limited to the extent of contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner
Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and partners may come and go
Separate Legal Entity Not a separate legal entity Separate legal entity under the LLP Act, 2008.
Agency Partners are agents of the firm and other partners Partners act as agents of LLP and not of the other partners
Administrative Aspects
Number of partners Minimum 2 and Maximum 20 (10 in case of banking business) Minimum 2 partners, no limitation of maximum number of partners
Governing Law Partnership is governed by the Partnership Act, 1932 LLPs are governed by the LLP Act, 2008 and various rules made there under
Regulatory Compliances There is no requirement of holding any statutory meetings/maintaining statutory records There is no requirement of holding any statutory meeting or maintaining statutory records except for books of accounts
Audit of Accounts Partnership firms are required to have tax audit of their accounts as per the provisions of the Income Tax Act LLPs are required to get their accounts audited as per LLP Rules only when the turnover or contribution is greater than Rs.40 Lacs or Rs.25 Lacs respectively
Taxation Aspects and Capital Requirement
Taxability Income of Partnership is taxed at a Flat rate of 30% plus education cess as applicable. Income of LLP is taxed at a flat rate of 30% plus education cess as applicable.
MAT MAT is not applicable to partnerships LLP is required to pay AMT as applicable. However the net taxability in case of LLPs is less compared to that of MAT in private companies
DDT DDT is not applicable to partnerships DDT is not applicable to LLPs
Capital Contribution Not Specified No explicit requirement of any minimum capital contribution
Withdrawal of Capital Withdrawal of Capital allowed Withdrawal of Capital allowed
Procedural Aspects
Registration Registration is optional Registration is required with Registrar of LLP
Agreement/Document Partnership Deed describes the rights and duties of the partners LLP Agreement denotes its scope of operation and rights and duties of the partners vis-a-vis LLP
Time Frame for Formation It takes about a week to incorporate a partnership firm Total Minimum Time Period - 10-15 days
Foreign participation
Foreign Participation Foreign Nationals cannot form Partnership Firm in India Foreign Nationals can be a Partner in a LLP, subject to certain restrictions and conditions
Others
Legal Identity Only registered partnership can sue third party A LLP is a legal entity can sue and be sued
Flexibility Gets dissolved on the death of any partner unless provided otherwise in the partnership deed Unlike partnership, LLP has flexibility, partners may come and go anytime
Financing Obtaining financing is difficult for a partnership firm A LLP being a more regulated entity is preferred by banks to lend money