When starting a business in India, choosing the right legal structure is one of the most consequential decisions. Private Limited Company (Pvt Ltd) and Limited Liability Partnership (LLP) are the two most popular choices.
Key Differences at a Glance
| Feature | Private Limited | LLP |
|---|---|---|
| Governing Law | Companies Act, 2013 | LLP Act, 2008 |
| Minimum Members | 2 Directors, 2 Shareholders | 2 Designated Partners |
| Taxation | 25% / 22% corporate tax + DDT | 30% flat (no DDT) |
| Annual Compliance | High (8-10 filings) | Low (2-3 filings) |
| Fundraising | Can issue shares, VC funding | Limited, no equity |
| Audit | Mandatory | Only if turnover > ₹40L |
When to Choose Private Limited
- You plan to raise venture capital or angel funding
- You want to hire employees with ESOPs
- You have significant growth ambitions
When to Choose LLP
- Professional services firm (CA, legal, consulting)
- You want minimal compliance burden
- Partners want profit-sharing flexibility
