Difference Between LLP & Private Limited Company

Choosing a right business structure is the first most crucial step to start a business. This decision helps in understanding further basic requirements and structure of a business. It lays the foundation of every business, thus it's important to understand the major differences between these business structures. In this blog, we will discuss in detail what is a private limited company, what is llp, difference between pvt ltd and llp and their features. This guide will help individuals to choose the most suitable business structure depending on their business goal.

What is a Private Limited Company?

A private limited company is a business structure which is held privately. Pvt Ltd Companies gets registered with the Registrar of Companies (RoC) under the Companies Act, 2013. Pvt Ltd Companies can be started with 2 minimum members and scale up to 200 shareholders. A Private Limited Company restricts shareholders from publicly trading shares but yet offers multiple benefits. Let’s discuss these benefits in detail

What is Limited Liability Partnership?

A Limited Liability Partnership or LLP includes the benefits of both a company and Partnership firm. In an LLP with the flexibility of a partnership, partners can enjoy limited liability just like shareholders in a Private Limited Company. LLP’s in India are recognised under the Limited Liability Partnership Act, 2008. Starting a Limited Liability Partnership Business in India can offer numerous benefits for the partners and the business as well including limited liability protection, lower registration cost, flexibility in management, and many more.

Confused between LLP and Private Limited Company?

Let us help you select the right structure for your startup

Book a 1:1 consultation with our expert today.

Difference between Pvt Ltd and LLP

Private limited companies and limited liability partnerships both business structures have their own significance. Following is the detailed table on the difference between private limited company and limited liability partnership:

Basis	Private Limited Company	Limited Liability Partnership
Governing Authority	Private Limited Company is governed by the Companies Act, 2013	Limited Liability Partnership is governed by the Limited Liability Partnership Act, 2008
Ownership	In private companies, shareholders holds the ownership	In llp, the partners hold the ownership
Management Structure	In Pvt Ltd, management decisions taken by Board of Directors	In LLP, management decisions taken by the partners
Best Suitable for	Tech Startups, Medium Enterprises, Financial Services, etc	For Professional Services, Consultancy Firms,etc
Fundraising	Fundraising is easier and can raise funds through investors or by issuing new shares	Fundraising is limited in an LLP since it cannot issue shares and mainly depends on partner contributions
Transfer of Ownership	Shares can be transferred by amending AoA in private companies	Transfer of partnership is only possible with existing partners’ consent
Board Meetings	For Pvt Ltd, 4 mandatory board meetings must be conducted	For LLP, there is no mandatory board meeting required
Statutory Audit	Statutory Audit is mandatory for private limited companies irrespective of turnover or capital contribution	Statutory Audit is only mandatory for LLPs, if their turnover or capital contribution is more than ₹40 lakhs or ₹25 lakhs respectively
No. of Shareholders/Partners	For Private Limited Companies, there must be minimum 2 shareholders required which can go up to 200 members	For Limited Liability Partnership, there must be 2 minimum partners required with no maximum number of partners
Registration Forms	For Private company incorporation SPICe+ Part B is required along with SPICe+ Part A for name reservation	For LLP incorporation FiLLiP Form is required along with LLP-RUN Form for name reservation

LLP and Private Limited serve different purposes.

Get clarity before you register.

Connect with our incorporation specialist today.

Features of Private Limited Company

No Minimum Capital Requirement: Start your business with any amount as there’s no minimum investment required to register a Private Limited Company.
Separate Legal Entity: A Private Limited Company is considered as a separate legal entity, which simply means the company can own property, enter into contracts, and face legal proceedings by itself.
Limited Liability Protection: Enjoy peace of mind knowing that your personal assets are not liable for the company's liability under a Private Limited Company.
Tax Benefits: Enjoy a reduced corporate tax rate of 25% with a turnover of less than INR 250 crores. Private Company helps you save more compared to other business structures taxed at 30%.
Only 2 Members Required: One can start their Private Limited Company with just 2 members, and scale up to a maximum of 200 shareholders as your business grows.
Easier Access to Funding: Raise capital easily by issuing shares or taking loans, as Private Limited Companies are viewed more favorably by investors and financial institutions.

Feature of Limited Liability Company

No Minimum Capital Requirement: Start your business with any amount, as there’s no minimum capital required to register a Limited Liability Partnership.
Lower Registration Costs: Limited Liability Partnership offers affordable registration at the bare minimum cost in India. Thus, one can enjoy legal protections and benefits for their business at a low rate.
Limited Liability Protection: Enjoy peace of mind knowing your personal assets/wealth are safe and not liable for the contribution you made in your business.
Eliminates Double Taxation: Enjoy tax benefits as business profits are taxed only at the partner level, unlike corporations, which face double taxation at both corporate and dividend levels
Flexibility in Management: LLP lets you manage your business directly and efficiently without the need for a board of directors, unlike corporations.
Fewer Compliance Requirements: Easier to set up and maintain compared to private limited companies, making it a hassle-free choice for entrepreneurs.

LLP or Private Limited — which suits you better?

Let’s decide it strategically.

Book your consultation today.

Conclusion

Choosing between a Private Limited Company and an LLP depends on your business goals, funding plans, and compliance preferences. A Private Limited Company is ideal for startups looking to raise investment, scale rapidly, and build strong market credibility, while an LLP suits professionals and small businesses seeking flexibility with lower compliance requirements.

Before finalising your decision, consider your long-term vision, expected turnover, investor involvement, and regulatory obligations. Selecting the right structure at the beginning can help avoid future restructuring challenges and support sustainable business growth.

FAQs on Difference Between LLP & Private Limited Company

Limited Liability Partnership or LLPs are ideal for small businesses, consultancies or startups seeking low compliance and operational flexibility while Private Limited companies are more suitable for businesses with equity investment, high-growth startups, etc.

Yes, generally a Private Limited Company involves higher incorporation and compliance costs compared to an LLP due to stricter regulatory requirements under the Companies Act, 2013.

An LLP cannot issue shares like a Private Limited Company. It mainly raises funds through partner contributions or loans, which makes external equity funding comparatively limited.

For a Private Limited Company, statutory audit is mandatory irrespective of turnover. For an LLP, audit is required only if turnover exceeds ₹40 lakhs or capital contribution exceeds ₹25 lakhs.

A Private Limited Company requires a minimum of 2 shareholders and 2 directors. An LLP requires at least 2 designated partners to start.

In a Private Limited Company, ownership can be transferred by transferring shares. In an LLP, transfer of partnership rights generally requires consent from existing partners as per the LLP agreement.