Of all the decisions you make when starting a business, the most important decision is to choose the right structure for your business. You need to evaluate several criteria before choosing the type of business to form. You should know the pros and cons of the business structures which makes easy to decide which one is the best fit for your business.
Broadly, the type of business entity you choose will depend on these primary factors: liability, taxation, record keeping. To determine the which form of entity to create, the following basic information will help you to make the right choice because it’s not possible without understanding the basics of the various kinds of business organisations.
Limited Liability Partnership (LLP) is a hybrid form of a corporate business that provides both the benefits of a company and flexibility of a partnership firm i.e. it enjoys the limited liability to the extent of the contribution and the flexibility in the internal structure of an organisation as a partnership based on a mutually arrived agreement.
According to the Companies Act 2013, a public company is a company which is not a private company and has a minimum paid up capital of Rs.500000 or higher as prescribed in the agreement; meaning, the company which is not managed by a group of private individuals. In fact, it is the legal designation of a limited liability company which has offered shares to the public and has limited liability. The term public limited company is commonly known in western countries as “PLC”.
The following table showing some key points of differences:
Particulars
LLP
Public Company
Prevailing Law
LLP is prevailed by the Limited Liability Partnership Act, 2008 and Limited Liability Rules.
Public companies are prevailed by the Companies Act, 2013.
Registration
Limited Liability Partnership is required to register with the MCA (Ministry of Corporate Affairs).
A Public Company is also required to register with the Ministry of Corporate Affairs.
Name of the entity
Name of the limited liability partnership contains ‘LLP’ as a suffix.
Name of the public company contains ‘Limited’ as a suffix.
IPO
LLP cannot raise external funding through an IPO (Initial Public Offering.
A public company can issue securities to the general public through an IPO (Initial Public Offering).
Uninterrupted Existence
LLP has a perpetual succession; partners may come and go.
The public company also has a perpetual succession; members may come and go.
Audit compliance
LLP required to get their accounts audit annually when:
Public company required to audit their accounts when:
Number of members
minimum-2
maximum-unlimited
minimum-7