Limited Liability Partnership (LLP), introduced only in 2008,
has quickly become a popular legal structure for businesses. As its name suggests, the liability of
its partners is limited unlike the partnership firm along with the requirement of minimal
maintenance. So, in case of any default, assets in the name of LLP are liable & not the personal
assets of the directors. A Limited Liability Partnership combines the advantages of both the Company
and Partnership into a single form of organization and one partner is not responsible or liable for
another partner's misconduct or negligence.
As per company law, a Private Limited company is a limited liability company with a minimum of two
and a maximum of 200 members. Although Private limited company has limited liability and a separate
legal entity, at the same time it has all the advantages of partnership namely flexibility, the
greater capital combination of different and diversified abilities, etc. Before opting for a private
limited company, one must keep in mind:
• That Private limited company’s shares are not listed on stock exchanges & hence, cannot be freely
traded.
• That the scope is limited due to restrictions in several shareholders but enjoys fewer legal
restrictions.
• That the word “Pvt. Ltd.” must be suffixed in the name.
• That at least one designated partner should be an Indian Citizen.
NO MINIMUM CAPITAL | No requirement of minimum paid-up capital required for starting a Private Limited Company. |
EASE OF FORMATION | A Private Limited Company can be easily registered and is easy to manage and run with less legal compliance's. |
BUILD A GREAT TEAM | Today, in the business world it is important to have the option of providing stock ownership or ESOPs to employees which can be offered only by Limited companies. |
SEPARATE LEGAL ENTITY | The biggest advantage of a Private Limited Company is that its identity is distinct from that of its members which ultimately limits the liability of members. A company is a separate person having its rights & Obligations enabling it to enter into contracts in its name, right to sue & be sued. |
PERPETUAL SUCCESSION | In case of the death of the owner or transfer of shares, your business won’t get affected as the company is considered as separate from its members. |
LIMITED LIABILITY | The greatest benefit of Private Limited Company is a limited liability. If any liability arises then its member’s assets remain unaffected; members are only liable for unpaid shares held by them and not more than that. Stakeholders are not liable for corporate debts and liabilities. |
GREATER FLEXIBILITY | A Private Limited Company is required to perform lesser legal formalities as compared to a Public Limited Company. It enjoys special exemptions and privileges under the company law. Therefore, in Private Limited Company, less number of compliance is required. |
SECRECY | A Private Limited Company is not required to publish its accounts or file several documents. Therefore, it is in a better position than a public company to maintain business secrets. |
ATTRACT INVESTMENT | Private limited companies easily accommodate equity funding as there is a clear distinction between shareholders and directors as well as limited liability. Venture capitalists and private equity funds prefer to invest in this structure. |
TRANSPARENCY & CREDIBILITY | Private Limited Company enjoys enhanced transparency as the information relating to a company is available in a publicly searchable database. Thus, able to win the trust of the general public & improve business credibility. |
EXIT PLAN | It offers the best type of exit plan for all promoters. Only the shares of a company can be sold or transferred to another entity without any hassles, while the business remains a going concern. |
GOING INTERNATIONAL | A private limited company allows FDI up to 100% through automatic route without any prior government approval. |
1. Self Attested PAN Card copy
2. Self Attested copy of any one of the Identity Proof(Voter's ID/Passport/Driver's License)
3. Self Attested copy of Address Proof in the name of the director (Any utility bill i.e., mobile bill/water bill/ electricity bill, or bank statement which should not be older than two months)
4. Passport-sized photograph
1. Rent Agreement (Notarised: For rented property)
2. Sale Deed/Property Deed in English (in case of owned property)
3. No-objection Certificate from the property owner
4. Latest Electricity Bill / Mobile or Telephone Bill / Latest Bank Statement/Gas Bill
Private Limited Company | Limited Liability Partnership | One Person Company | Partnership Firm | |
Preferred for | Start-ups | Professional Services Firms | Sole Proprietors | Small-medium sized businesses |
Limited Liability Protection | Yes | Yes | Yes | No |
Minimum Requirement | 2 Shareholders | 2 Designated Partners | 1 Director 1 Nominee |
2 Partners |
Fund Raising Options | High | Low | Low | Low |
Tax Advantage | Few | Most | Few | Minimal |
Statutory Compliance's | High | Low | High | Minimal |
Compliance Cost | High | Medium | Medium | Low |
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