Choosing the right business structure is like choosing the foundation of your house. Get it wrong, and you’ll face cracks later — in compliance, funding, and scalability.
In this edition, let’s break down Private Limited Companies vs. Limited Liability Partnerships (LLPs) so you can decide with clarity.
1. Ownership & Structure
Private Limited Company (Pvt Ltd)
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Separate legal entity
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Owned by shareholders (minimum 2)
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Managed by directors
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Shareholding can be transferred
LLP
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Separate legal entity
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Owned by partners (minimum 2)
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Partners have flexibility in management
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Transfer of ownership is more complex
2. Compliance Requirements
Pvt Ltd
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ROC filings (AOC-4, MGT-7)
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Mandatory statutory audit (regardless of turnover)
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Board meetings & resolutions
LLP
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ROC filings (Form 11, Form 8)
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Audit only if turnover > ₹40 lakh or capital > ₹25 lakh
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Fewer governance formalities
3. Taxation
Pvt Ltd
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Flat 25% corporate tax (if turnover ≤ ₹400 Cr)
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Eligible for Startup India benefits under Section 80-IAC
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Dividend Distribution Tax abolished (but dividend taxed in hands of shareholder)
LLP
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Flat 30% tax rate
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No dividend tax — profits taxed only in LLP
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Fewer startup scheme benefits
4. Funding & Investor Preference
Pvt Ltd
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Preferred by VCs, angels, and institutional investors
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Easy to issue equity shares, ESOPs
LLP
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Less attractive to investors (no shares)
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More suited for small partnerships or service firms
5. Setup & Costs
Pvt Ltd
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Slightly higher setup & compliance cost
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Worth it for growth & funding readiness
LLP
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Lower compliance cost
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Ideal for small, steady businesses
Quick Decision Guide
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Planning to raise funds? → Go Pvt Ltd
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Want low compliance & not seeking external investment? → Go LLP
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Need flexibility for professional partnerships? → Go LLP
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Building a scalable business? → Go Pvt Ltd
🎯 Final Thought
Your structure impacts taxation, compliance, funding, and even exit options. At CFO Emeritus, we help founders choose and set up the right structure — and ensure you’re compliant from day one.
📩 Need help registering a Private Limited or LLP? Email us at office@cfoemeritus.com
