Why LLP is more valuable than a Private Limited Company

Why LLP is more valuable than a Private Limited Company?

  • By:ARIVAZHAGAN LE INTELLIGENSIA

Limited Liability Partnerships(LLP) Vs Private Limited Company (PLC)

Awesome! You have a great plan for a startup, you’ve driven business, and have a team that backs you and are raring to go. But, wait! Have you thought about what type or category of company you fill the form? How many directors or partners? What amount of capital you are decide to dispose of? What way will the company take? No? Well, with this article we hope to clear that up for your new company.

We are going to examine at LLPs(Limited Liability Partnerships) of their merits and try to articulate the point that LLP is better than Private Limited Company. Before we see PLCs in a bad picture and LLPs as the best choice, there are more upsides to Private Limited company incorporation as well as similarities between PLCs and LLPs. You can check out 4 easy steps for registration of a private limited company in Bangalore. For more detailed information into when it could be wiser to go with PLCs

Three Similarity Points for LLP and PLC:

  1. LLPs and Private Limited companies both require a minimum of 2 directors (or) shareholders (or) partners to start incorporation.
  2. Private Limited Companies & LLPs both have Limited Liability to personal assets. (Limited to a nominal value of a share of company shareholders)
  3. LLPs and Private Limited Companies both are a body corporate and a legal entity separate from its partner’s companies and shareholders companies.

Registration Procedures for LLP and PLC in India

The procedures for the Private Limited Company Registration process and the LLP Registration process, are simplistic and very similar to each other. Some of the basic steps for the incorporation of these companies

Private Limited CompanyLimited Liability Partnership LLP
1. Obtaining Digital Signature Certificate (DSC) for Proposed Directors of the company1. Acquire Digital Signature Certificate (DSC) for Prop Partners
2. Acquire Directors Identification Number (DIN) for Proposed Directors2. Obtain Designated Partner’s Identification Number (DPIN)
3. Name Approval from Ministry of Corporate Affairs(MCA)3. Need a Name Approval from MCA
4. Filing for Incorporation4. Incorporation Filing

The Ministry of Corporate Affairs (MCA) is also taking steps to ensure a faster processing way of company incorporation procedure to incorporate a company now in just 1 day.

Why LLP is more valuable than a Private Limited Company

It is easy to see that both PLC and LLP registration procedures are rather simplistic. Thus, it is not a question of ease of incorporation it comes down to deciding the direction and future of the company. We have also seen that it could be beneficial to incorporate PLCs sometimes. However, Le Intelligensia provides you with a comprehensive argument for why Limited Liability Partnerships (LLPs) should prefer as compared to Private Limited Companies.

  • LLPs combine the operational benefits of a company and also the flexibility of partnership companies.
  • The fee for incorporation of an LLP firm is very lower range as compared to that for private limited company
  • The Compliance requirements are very lower for LLP, compare to that for private limited company. The frequency of mandatory audits for LLP is revenue 0 if they haven’t crossed the 40 lakhs turnover mark or 25 lakh revenue contribution mark.
  • A private limited company has restricted ownership conditions and the PLC can only extend the number of owners to a maximum of 200 shareholders in a private limited company. However, there no restriction which to LLPs in India.
  • The requirements for meetings are substantially more for PLCs with the requirement of holding 4 board company meetings and 1 annual general meetings of the all partners company but is not a compulsory requirement of holding meetings.
  • The cost of incorporating and maintaining a PLC(Cost Details: INR 15000/- Incorporation + INR 15000/- Compliances + INR 15000/- Audit). So, PLC is three times higher than of LLP(INR 11,000 Incorporation + INR 4,000 Compliances). This makes LLP an economical choice.
  • PLC model not adopting startup owners and its economically hurtful & risk. Sometimes owners of a private limited company unable to pay or do not pay their compliance requirements in time, Leading to fines of up to INR 1 lakh sometimes. However, with LLPs, you can skip the hassle of fines altogether. The number of fees for compliances of LLP is very low and rarely leads up to a fine.

Conclusion:

There more advantages of LLPs over PLCs. In light of all these advantages, it is a wise choice for early-phase startups to do the LLP registration process. While PLCs have their benefits, LLPs have been grossly underestimated to help shape a company’s foundation. LLPs have proven to be an absolute miracle for construction and mechanical related type businesses ever since the incorporation of LLPs in the LLP act, 2008.

At Le intelligensia, We specialize in incorporate a company whether it is LLP registration or Private Limited Company registration along with GST registration, Brand name, and Logo registration.

Talk to us about your intellectual property requirement at 9108569562 or Send us an email at arivu@leintelligensia.com

Posted in: Company Registration, GST Registration, Private Limited Registration
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