It is a separate legal entity run by the Board of Directors. These Companies are owned by its shareholders and can have a maximum of 200 members. A Private Limited Company is registered under the Companies Act, 2013 and has limited liability for its members.
The members of the Company need not pay anything beyond the amount of shares held by them which makes the company and its members different from each other.
The Annual General Meeting is an important part of a Private Limited Company where all the major decisions like appointment of directors, auditors, change of capital and future business plans are discussed and agreed upon.
For example – Google India Private Limited
A minimum of 2 partners are required to incorporate a Partnership Firm which are responsible for all the losses the firm might face in case of unforeseen events like bankruptcy or failure of the business.
The firm can only come into existence with a written Partnership Deed which clearly mentions the name of all the partners in the firm. Both the firm and the partners are connected with each other.
In a Partnership Firm, share transfer cannot be initiated without the consent of all the partners involved in the business operations. The profits earned by the firm are divided among the partners in the ratio mentioned in the Partnership Deed.
For example – GoPro and Red Bull
Private Limited Company
As an Entreprenuer, it can be confusing to decide the type of business registratuion to go for. Considering the above differences between both forms of business, it is always beneficial to go for a Company Registration if you are planning for a business on a large scale in future.
Also, the benefit of limited liability in case of a Private Limited Company reduces the risk of involving personal assets and belongings into the business. If the need be it can be easily converted into Partnership Firm through a legal procedure.