Partnership vs LLP vs Private Limited Company

Partnerships, LLPs and Private Limited Company have a few fundamental differences in the way they are registered, the name approval process, taxations, transferability, annual statutory filings, the filing of annual returns etc. The chart below will give you an overview of how these three types of companies vary and their core differences.

Factors Partnership LLP Private Limited Company
Registration Registration of Partnership is optional, it may or may not be registered. This if registered is done under the Partnership Act, 1932. Limited Liability Partnership is registered with the MCA(Ministry of Corporate Affairs) and is done under the LLP Act, 2008. A Private Limited Company is registered under the Companies Act, 2013 with the Ministry of Corporate Affairs.
Name Approval of Entity For a Partnership, there is no need of permission for the approval of the Name. The promoters can directly choose the name, however it is recommended not to take trademarked names. The Name of the LLP needs approval from the Registrar of Company. Already existing names are not permitted. The Name of the LLP must have an ending with "Limited Liability Partnership" or "LLP" The Name approval process is similar to an LLP but the Private Limited Company names end with the words "Private Limited Company". It needs to be approved by the RoC.
Legal Status of the Entity The Partnership firms are not recognized as separate legal entities. The promoters and partners are responsible for the liabilities attached to the Partnership. A Limited Liability Partnership is a distinct legal entity which is registered under the LLP Act, 2008. In this the partners or members are not responsible for the liabilities and debts of the Company. A Private Limited Company is also a separate legal entity hence enjoys similar benefits as an LLP. The Directors an shareholders are not answerable for any debts neither are they responsible for the liabilities of the Company.
Liability of the Members In Partnership the Partners have unlimited Liabilities and are responsible for all the liabilities attached to the firm. The Partners of an LLP have limited liabilities and it extends only till the amount that they have contributed. The Shareholders in a Private Limited Company are liable only to their shares, which means it has limited liabilities.
Transferability Not transferable Ownership can be transferred Ownership can be transferred by way of share transfer.
Number of Members A Partnership needs to have minimum two person to start off the business and it can extend upto maximum twenty An LLP needs to have minimum of two persons to start doing business. It can have unlimited members. Minimum two person is required to start a Private Limited Company. This has restrictions as it can only have a maximum of 200 shareholders /members.
Foreign Ownership It is not permitted for the foreign nationals to be a partner in a Partnership Firm. To be an investor or member of an LLP, the foreign nationals need to get prior approval of the Reserve Bank of India. Foreigners are allowed to invest in a Private Limited Company and it is done under the automated approval route.
Taxation The Partnership profits are taxed at 30% in addition to the surcharge and cess as applicable. LLP profits are also taxed 30% in addition to the surcharge as applicable. It is same as LLP & Partnership i.e. 30% in addition to the surcharge.
Annual Statutory Meetings Not Required Not Required Board Meetings and general Meetings are essential to be conducted by a Private Limited Company.
Annual Filing There is no need to file the Annual Report but the Tax filing (Income Tax Return) must be filed by Partnership. It is must to file the Annual Statement of Accounts & Solvency along with the Annual Returns and Tax Returns with the Registrar each year. Private Limited Company must file the Annual Accounts & Annual Return with the Registrar each year along with the Income tax Returns.
Registration Cost
Limited Liability Partnership  Rs. 7,999/- only Private Limited Company @ Rs. 12,999/- only

Click here to File Company Application

100% Online
No Hidden Charges
Track Your Order

Related Articles

Search Companies