COMPARISON BETWEEN LIMITED LIABILITY PARTNERSHIP AND PRIVATE LIMITED COMPANY Process of Formation: Category Incorporation LLP Pvt.

Ltd. Company

Minimum number of member Minimum of 2 Partners are required. required for formation is 2 and One must be resident of India maximum is 50 Firstly need to apply for Designated Partner Identification Number (DPIN) for the 2 designated partners of LLP and Obtain Digital Signature for the Partners of the Proposed LLP. (at least one Partners should have a Digital Signature) Application for Name Availability & Obtaining the Name for the proposed LLP. Filing of Form-2 (Incorporation Document and Statement), Form 3 (Information with regard to LLP agreement) and Form-4 (Notice of Appointment of Partner/Designate Partner, his consent etc.) The first step for incorporation of a company is selection of name for the proposed company. Then apply for Directors Identification Number and Digital Signatures.

Step for Incorporation

Drafting of Memorandum and Articles of Association.

Stamping, digitally signing and efiling of various documents with the Registrar.

Obtaining Certificate of Registration

Obtaining Certificate of Incorporation

Feature Comparison: Category Registration Legal Status Compulsory With ROC Separate Legal entity LLP Pvt. Ltd. Company Compulsory With ROC Separate Legal entity

Cost of formation

Formation costs are slightly lower than that of Pvt. Company Min. cost of formation: Rs. 800/- (approx.) Limited except in case of intentional fraud or wrongful act of omission or commission by the partner LLP is subjected only to Income tax and Alternate Minimum Tax. Dividend Distribution is not applicable on LLP There is no requirement to hold any meeting Annual statement of accounts and solvency & Annual Return has to be filed with ROC Not mandatory unless the contribution is above Rs. 25 Lakhs or Annual turnover is above Rs. 40 Lakhs in any Financial year Creditworthiness is higher compared to that of a partnership but lesser than a company Protection provided to employees and partners who provide useful information during the investigation process Less Procedural as compared to a Company Voluntary or by Order of National Company Law Tribunal

Formation costs are comparatively higher than that of LLPs Min. cost of formation: Rs. 6000/- (approx.) The Liability of member is limited to the value of shares held by him or the amount guaranteed by him. Company is liable to pay income tax, Dividend distribution Tax and Minimum Alternative Tax. Quarterly Board of Directors Meeting, Annual shareholders meeting is mandatory Annual Accounts and Annual Return to be filed with ROC

Liability of Partners / Members

Taxability

Meetings

Annual Return

Audit

Compulsory irrespective of share capital and turnover

Bankers perception of creditworthiness

High creditworthiness due to stringent compliances and disclosures

Whistle blowing

No such provision

Dissolution

Very procedural. Voluntary or by Order of National Company Law Tribunal