Corporate Structures Comparative

Features Partnership firm Limited Liability Partnership (LLP) Private Limite Company (Pvt. Ltd. Co.)
Statute Partnership Firms are governed and regulated LLPs are governed and regulated under Limited Companies are governed and regulated under
under The Indian Partnership Act, 1932 liability Partnership Act,2008 Companies Act, 1956
Registration Not compulsory. However If the firm is Compulsory registration required with the ROC Compulsory registration required with the ROC.
unregistered then 1) a partner cannot sue the Certificate of Incorporation is conclusive
firm or any other partner,2) Partners and firm evidence.
cannot sue a third party, 3) Firm cannot claim
set off against a third party sue
Formalities of Incorporation In case of registration, Partnership Deed along Various e-forms and the LLP Agreement are filed Various e-forms along the Memorandum &
with form / affidavit required to be filled with with the Registrar of LLP along with the Articles of Association are filled with Registrar of
Registrar of firms along with requisite filing fee prescribed Fee. Companies with prescribed fees

Cost of Incorporation Rs 1000-7000 Rs. 13,000-18,000 Rs. 18,000-20,0000

Distinct entity Not a separate legal entity Is a separate legal entity under the Limited Is a separate legal entity under the Companies
Liability Partnership Act, 2008. Act, 1956.
Perpetual Succession It does not have perpetual succession as this It has perpetual succession and partners may It has perpetual succession and members may
depends upon the will of partners come and go come and go.
No. of shareholders / Partners 2- 20 partners min: 2 partners. no limit on max Private: 2 to 50
public: min 7
Meetings Not required Not required Quarterly Board of Directors meeting, annual
shareholding meeting is mandatory.
Minimum number of directors No Directors/designated partner requirement Minimum partners 2 Private min 2
Public company 3
Taxability- tax on Income The income is taxed at 30% + 3 %cess+12% The income is taxed at 30% + (above 1 cr) Manufacturing Co: 15%
individual: surcharge 15% surcharge , 2cr presumptive surcharge at 12% + 4 %cess Others: 25% upto 25cr turnover (22% without
incentives)
surcharge at 12% + 4 %cess
Taxability- MAT/AMT 18.5%+Surcharge at 10%+3% Cess 18.5%+Surcharge at 10%+3% Cess 18.5%+ Surcharge at 5 % + 3% Cess
individauls: 20Lakhs ATI
Dividend distribution tax NIL NIL 15%+ surcharge 5 % + cess 3 %
Foreign Nationals as shareholder / Partner Foreign nationals cannot form partnership firm. Foreign nationals can be partners. Foreign nationals can be shareholders.
NRIs allowed
Corporate Structures Comparative
Features Partnership firm Limited Liability Partnership (LLP) Private Limite Company (Pvt. Ltd. Co.)
FDI Permitted on non-repatriation basis. LLPs with FDI will be allowed, through the Permitted
Government approval route, in those
sectors/activities where 100% FDI is allowed,
through the automatic route and there are no
FDI-linked performance related conditions
Ownership of Assets Partners have joint ownership of all the assets The LLP independent of the partners has The company independent of the members has
belonging to partnership firm ownership of assets ownership of assets
Liability of Partners/Members Unlimited. Partners are severally and jointly Limited, to the extent their contribution towards Generally limited to the amount required to be
liable for actions of other partners and the firm LLP, except in case of intentional fraud or paid up on each share.
and liability extend to their personal assets. wrongful act of omission or commission by the
partner.
Annual Return No return is required to be filed with Registrar of Annual Return has to be filed with ROC within within 60 days from the annual general meetings
Firms sixty days of the closure of the financial year. is held, prepare and file with the Registrar

Audit Limit- 1 cr for business and 50 lakhs for All LLP except for those having turnover less than Compulsory
profession Rs.40 Lakhs or Rs.25 Lakhs contribution in any
financial year
Transfer of Share / Partnership rights in In case of death of member, shares are legal heirs have the right to get the refund legal heirs have the right to get the refund
case of death transmitted to the legal heirs. Legal heirs will not become partners Legal heirs will not become partners
Legal Proceedings Only registered partnership can sue third party A LLP is a legal entity can sue and be sued A company is a legal entity which can sue and be
sued
Creditworthiness Creditworthiness depends on goodwill and Perception is higher compared to that of a High creditworthiness, due to stringent
credit worthiness of the partners partnership but lesser than a company. compliances and disclosures required
Dissolution By agreement of the partners, insolvency or by Less procedural compared to company. Very procedural. Voluntary or by Order of
Court Order Voluntary or by Order of National Company Law National Company Law Tribunal
Tribunal
Suitability More suitable for small businesses like retail More suitable for professionals like CAs, CSs, More suitable for scaling startups, businesses,
,wholesale trade or small manufacturing units, advocates etc and service sector oriented trade, manufactures, large industrial
legal firms ,etc. businesses. establishments etc