A comparative analysis between a company registered under the companies act 1956 and an LLP registered under LLP act 2008 has been made on different parameters to create the reader to know the fine differences between both the business structures:
Governing Law
Company: companies act 1956 and rules made thereunder
LLP: LLP act 2008 and rules made thereunder.
Company Registration
Company: Mandatory
LLP: Compulsory
DIN/DPIN:
Company: Each director is need to have a DIN before appointing a director
Each director is need to have a DIN before appointing a director
LLP : Each designated partner is need to have a DPIN ( it contains 226A, 226B, and 266E of the companies act 1956) before appointing as a designated partner.
DSC:
Company: At least one director of the company should have a digital signature
LLP: At least one designated partner should have a digital signature
Minimum number of partners/members:
Company: Minimum 2 for private limited company and 7 for public limited company
LLP: Minimum 2 partners
Designated partners/ Managing partners/ Directors
Company: Appointment of Managing Director, Manager, Whole-time Director to be made in case of public companies having paid-up share capital of 5 crore or more.
LLP: No other obligatory need viz, appointment of Company Secretary, Whole-time Partner, Manager.
Maximum number of members
Company: In case of private limited company maximum 50 and no maximum numbers of members in public limited company.
LLP: No cap on the maximum number of partners.
Compulsory for a Designated Partner/ Director/ Member/ Managing partner to be a partner
Company : Director need not to be a shareholder/member of the company
LLP : Designated partner has to be a partner of the company
Legal fee for the registration of company/LLP:
Company: Minimum typical legal fee for private limited company registration with a share capital of Rs.1,00,000 and approximately Rs.6000. The minimum typical fee for public limited company registration with a share capital of Rs.10,00,000 and an approximately of Rs.30,000.
LLP: Minimum suggestive legal fee for LLP registration is not exceeding of Rs.100000 and approximately Rs.1000. The fee for LLP registration is also not exceeding Rs.10,00,000 with an approximate amount of Rs.6000.
Name:
Company: Suffix “Limited” or “Private Limited” has to be added in the company name.
LLP: Suffix “LLP or Limited Liability Partnership” is to be added in the name.
Changes of the registered office within the same state
Company: A company can change its registered office from one place to another within a state only upon confirmation by the regional director.
LLP: LLP may change the registration office of their current location by observing the method put down in the LLP agreement and file the details to improve with the registrar in the specified form.
Authority to conduct business
Company: Individual member or nominee/non-executive director does not have authority in conduct of business of the company.
LLP: The LLP contract offers to the opposite; every partner may involvement in the LLP administration.
Drawings:
Company: Drawings are not permitted
LLP: Drawings are permitted as per the LLP agreement
Annual return
Company: Annual return is need to be registered with the ROC annually in the required look
LLP: Annual return is need to be registered with the ROC annually in the required structure
Transfer of shares/partnership rights in case of death
Company: Shares of every company (except private limited company). Because it is freely transferable
LLP: Rights/interest of partners in LLP are transferable as per the LLP conditions.
Taxation
Company: It is considered as a separate taxable entity under the Income Tax Act 1961
LLP: It is treated as a partnership firm under the Income Tax Act 1961
Preservation of books of account
Company: 8 years
LLP: 8 years
Formalities of incorporation:
Company
Different documents / statements executed in specified formats pre-filled in e-forms (containing consent of directors) are need to be registered with the ROC with the company registration fees. The MoA and AoA are need to be registered as per the conditions of the companies act. It is specified in detail in Part II of the companies act.
LLP
Different documents/ statements performed in specified formats pre-filled in designated e-forms (containing consent of designated partners) are need to be registered with the ROC with the filing fees. The MOA of a company is asking the incorporation document, LLP agreement is to be registered. It is specified in chapter III of the LLP act 2008.
Different documents/ statements performed in specified formats pre-filled in designated e-forms (containing consent of designated partners) are need to be registered with the ROC with the filing fees. The MOA of a company is asking the incorporation document, LLP agreement is to be registered. It is specified in chapter III of the LLP act 2008.
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