What is the difference between LLP and Private Limited

Limited Liability Partnership

What is the difference between LLP and Private Limited

Registrationwala

Preface: This post was originally published in 2022 and has been updated on July 12, 2025, to provide you with the most current and accurate information.


Both Limited Liability Partnership (LLP) and Private Limited Company (Pvt Ltd Co) are popular business structures in India. While LLPs are governed and regulated by the LLP Act 2008, the Pvt Ltd Companies are governed by Companies Act 2013. If you are planning to start a business, but are confused between LLP and pvt ltd, this blog post will be helpful!

What is LLP?

LLP full form is Limited Liability Partnership. It is a business structure that offers the combined benefits of a partnership and the limited liability protection of a corporation. The Limited Liability Partnership Act 2008 governs and registers LLPs in India. This Act came into effect on 31 March 2009.

Partners are not personally liable for the debts or actions of other partners in an LLP, and their personal assets are protected. To form an LLP, a minimum of two partners is required. Additionally, all designated partners must possess a valid Designated Partner Identification Number (DPIN).

What is Private Limited Company?

A Private Limited Company is a business entity governed by and registered under Companies Act 2013, which came into force on 1 April 2014. In this kind of business structure, ownership is limited to a certain number of shareholders and the shares cannot be traded publicly. 

In a pvt ltd, shareholders’ personal assets are protected from debts and obligations of the company. To form such a company, a minimum of two members and two directors are required. Every director of a pvt ltd must possess a valid Director Identification Number (DIN).  

LLP vs Private Limited: Key Differences

Lets understand the difference between LLP and Pvt Ltd based on some parameters listed below:

1.  Definition

An LLP is a business structure that merges the perks of a partnership (like operational functionality) with limited liability protection of a corporation.

A pvt limited co is a business structure that prohibits public-trading of shares. It offers limited liability protections to its shareholders.

2.  Legislation:

The LLP Act 2008 governs LLPs in India.

The Companies Act 2013 governs pvt ltd companies in India.

3. Minimum No. of Members for formation

A minimum of two partners is required for LLP formation.

A minimum of two shareholders is required for Pvt Limited Company formation.

4. Maximum No. of Members

An LLP doesn’t have a maximum limit on the number of partners it can have.

A Pvt Co can have a maximum of 200 shareholders.

5. Incorporation Form

FiLLiP (Form for Incorporation of Limited Liability Partnership).

SPICe+ (Simplified Proforma for Incorporating Company electronically Plus).

6. Flexibility

LLPs enjoy more flexibility compared to pvt companies.

Pvt companies enjoy less flexibility compared to LLPs.

7. Compliance Requirements

LLPs are subject to fewer compliance requirements.

Pvt companies are subject to stricter compliance requirements.

8. Taxation

LLPs must pay 30% fixed rate tax on total income. If the income is more than Rs.1 crore, the income tax amount for LLP attracts a surcharge of 12%.

Pvt ltd pays tax of 25% on annual revenue less than Rs. 400 crore. If the annual revenue exceeds Rs. 400 crore, then 30% tax needs to be paid.

9. Dissolution Form

Form 24 is used for dissolution of an LLP.

Form STK-2 is used for dissolution of a pvt ltd.

Conclusion

In this blog post, we explained how LLP and private limited differ from each other. On one hand, an LLP is a business structure that merges benefits of a partnership with those of a corporation, and offers limited liability to its partners and flexible management. On the other hand, a private limited is a business structure that provides limited liability to its shareholders but prohibits transfer of shares to the public.

Frequently Asked Questions (FAQs)

Q1. Which Act governs LLPs in India?

A. The LLP Act 2008 governs LLPs in India.

Q2. Who is responsible for registering LLPs in India?

A. The Registrar of Companies (ROC) is responsible for registering LLPs in India.

Q3. Are private companies subject to fewer compliance requirements compared to LLPs?

A. No, the private companies are subject to more stringent compliance requirements compared to LLPs. They must undergo mandatory audits, conduct board meetings, file financial statements regularly, etc.

Q4. Which Act governs Private Limited Companies in India?

A. The Companies Act 2013 governs the Private Limited Companies in India.

Q5. Do LLPs need to hire directors?

A. No, LLPs do not need to hire directors. The LLP partners are responsible for business management and decision-making.

Q6. How many directors are necessary to form a pvt co in India?

A. A minimum of two directors is necessary to form a pvt co in India.

Q7. Do LLPs need to conduct board meetings?

A. No, the LLPs don’t need to conduct board meetings, unlike private limited companies.

Q8. How much tax do pvt companies need to pay on their annual revenue?

A. Pvt companies need to pay 25% tax on annual revenue less than Rs. 400 crore. However, if the annual revenue is more than Rs. 400, then they need to pay 30% tax. 

 

Confused about which business model is better for you? Don’t worry. Just connect with the experts at Registrationwala. We will clarify all your doubts and help you decide which business model is right for you!

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