Difference between LLP (Limited Liability Partnership) and Private Limited Company

Posted on: 2017-04-05 00:04:14

A lot of entrepreneurs in India want to form a private limited company. At the same time there are also some businessmen who wish to set up a limited liability partnership company. They are always curious regarding how both these types of business entities compare. It needs to be said in this context that both the entities have a number of features that are similar to each other and come in handy when it comes to running small and large businesses, but there are several areas where they differ significantly from each other.

The process of registration

Normally, the processes of registering both these kinds of companies are pretty similar with some differences in terms of forms and documents being filed for the process of incorporation. If you wish to incorporate a limited liability company you will need at least two shareholders. In case it is a private limited company you would not be allowed to have more than 50 shareholders. In case of a limited liability partnership you will need to get at least a couple of partners. However, there is no upper limit for the partners that can form such a company. Even a corporate body can become a member of a limited liability partnership as well.

Incorporating the companies

You can always update your information regarding LLP Vs Pvt Ltd from the internet as well as any other trusted source that you may have. In the first step of incorporating a limited liability partnership you have to apply to get the designated partner identification number (DPIN) from the concerned authorities. This designated partner identification number will come in handy for the designated partners of the company thus formed. You also need to get a digital signature for one of the partners.

On the other hand, in order to form a private limited company you first need to decide the name of the company to be. After this, you should apply for the digital signatures as well as the designated partner identification number. This is important information pertaining to private limited company registration. It is in the second stage of incorporating a limited liability partnership that you decide the name of the company and get the same on the basis of availability. In the second stage in case of a private limited company you need to draft the memorandum and articles of association.

In the third stage of LLP registration you draft the limited liability partnership agreement for the company in question and then file the incorporation document. This comprises Forms 2, 3, and 4 that can be downloaded from lip.gov.in. After filling up the forms they need to be handed over to the Registrar of Companies. In case of a private limited company there are some different processes involved. You need to stamp, digitally sign, and e-file the memorandum and articles of association along with e-forms 1, 18, and 32. This needs to be done in accordance with the Companies Act, 1956 as well as other documents that are mentioned in the articles of association that you have provided to the Registrar. The final stage sees the procurement of the respective certificates of registration.