Quick Answer: Which Is Better LLP Or Private Limited Company?

What is the difference between LLP and Ltd Company?

Usually, the members of an LLP are treated as self-employed and will be liable to pay income tax on their share of the LLP’s profits.

On the other hand, a limited company is treated as a separate entity for tax purposes and it will pay corporation tax on the company’s profits..

Is GST applicable for LLP?

The Central Government recently notified that the Limited Liability Partnerships (LLP) registered under the 2008 Act must be considered as a partnership firm or Firm under the Goods and Services Tax (GST) regime. … In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.

Can LLP raise funds from public?

It is pertinent to note that the major disadvantage of the LLP is that it cannot raise funds from the public at large.

What is the main purpose of an LLP?

Limited liability partnerships (LLPs) allow for a partnership structure where each partner’s liabilities is limited to the amount they put into the business. Having business partners means spreading the risk, leveraging individual skills and expertise, and establishing a division of labor.

Is LLP better than Pvt Ltd?

It offers limited liability, offers tax advantages, can accommodate an unlimited number of partners, and is credible in that it is registered with the Ministry of Corporate Affairs (MCA). At the same time, it has fewer compliances than a private limited company and is also significantly cheaper to start and maintain.

Is it good to join LLP Company?

The advantages of registering a business as an LLP: An LLP is easier to start and manage and the process has fewer formalities. It has a lesser cost of registration as compared to a Company. LLP is like a corporate body having its existence other than its partners. LLP can be started with any amount of minimum capital.

What is the income tax rate for LLP in India?

30%LLP is liable to pay tax at the flat rate of 30% on its total income. Surcharge: The amount of income-tax (as computed above) shall be further increased by a surcharge at the rate of 10% of such tax, where total income exceeds one crore rupees.

Can we convert LLP to private limited company?

An LLP can be converted into a Pvt. Ltd. company as per the provisions contained in Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014.

What are the disadvantages of LLP?

Disadvantages of an LLPPublic disclosure is the main disadvantage of an LLP. … Income is personal income and is taxed accordingly. … Profit can not be retained in the same way as a company limited by shares. … An LLP must have at least two members. … Residential addresses were historically recorded at Companies House.

Who Cannot be a partner in LLP?

It is clarified that as per section 5 of LLP Act, 2008 only an individual or body corporate may be a partner in a Limited Liability Partnership. An HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008. Therefore, a HUF or its Karta cannot become designated partner in LLP.

Can LLP be converted into company?

According to the provisions of ‘Section 366 of the Companies Act, 2013’ and ‘Company (Authorised to Register) Rules, 2014’, the LLP businesses have the rights to convert into the company. The approval of name will be acquired from the Registrar of Companies (ROC) after submitting the application in an e-format.

Is tax audit applicable to LLP?

Tax Audit of the accounts is mandatory for an LLP with annual turnover of Rs 100 lakh or more. (upto FY 2019-20). However, from 2020-21, it would be applicable for turnover above 500 Lakhs. … The due date to file income tax in such cases is 30th November of every year.

Who are GST exempt?

Businesses and individuals are exempt from GST if their annual aggregate turnover is less than a specific amount. At the time of GST implementation in July 2017, businesses/individuals with annual aggregate turnover of less than Rs. 20 lakhs were allowed GST exemption.

Is an LLP a private company?

An LLP is an attractive entity to establish mainly due to tax reasons. … Unlike a private company, an LLP is not required to pay any dividend distribution tax and profits distributed and they are not liable to tax in the hand of the partners.

What is the major advantage of an LLP?

The primary advantage for an LLP is that it establishes a separate legal entity from that of the general partners. As such, an LLP may own property as well as sue and be sued in a legal arena. By far the most beneficial aspect of separate legal status is the limited liability protection it provides.

Do LLP have shareholders?

An LLP is a type of body corporate, introduced in 2001 by the Limited Liability Partnerships Act 2000. … Unlike a company, an LLP does not have shares or shareholders, nor does it have directors – it simply has members.

Can an LLP retain profits?

Profits can’t be retained Unlike a limited company, there is no option to retain profits for the following year. All profit made must be distributed in the same financial year.

Is LLP required to deduct TDS?

No TDS deduction is necessary from the LLP while making payment of interest and remuneration payment to LLP Partners.