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Private Limited Company vs Partnership

Private Limited Companies have Companies Act 2013 and Partnership Firm have Partnership Act 1932. There can be Maximum 200 members in a Private Limited Company and 20 members in a Partnership Firm.

There are very few common things in Partnership Firm and Private Limited Company. Private Limited Company are more reliable for doing business. The clause of separate legal entity, Name Clause, Liability Clause, etc. gives a whole new picture in making the decision between Private Limited and Partnership.

Following the key points which are important at the time of deciding:-

Particulars Private Limited Company Partnership Firm

Name Clause

Name of any company which is registered under Companies Act 2013 cannot be taken by any other company or LLP Name can be decided by the partners, whatever they deem fine for it. There is no approval needed from any authorised body. There can be many partnership firms with the same name but different owners.

Separate Legal Entity Clause

 Every business is conducted in the name Company only and Liability of the shareholders will be limited to their unpaid amount of share capital. No further amount can be recovered from shareholders. A Partnership Firm is connected to its partners. Partners shall be liable for any act which is done by the Partnership firm.

Liability of the Members

The liability of the shareholders is limited up to the unpaid amount of share capital. Liability of the Member in the case of Partnership Firm is unlimited

Annual Filing

Annual Compliance work is mandatory in the case of Private Limited Company
  • Appointment of Auditor
  • Audit of Company
  • ROC Filings
  • Annual General Meeting
  • Income Tax Filings
There are no such mandatory compliance. Compliance which is required by the Partnership firm is to file tax returns, etc.

Incorporation Cost

It cost around  13,500 to 15,000/- It cost around 6000/- to 7000/- 

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