Difference Between LLP and Company in India: A Complete Guide

Choosing the right legal structure is one of the most important decisions for any entrepreneur. Two popular business structures in India are the Limited Liability Partnership (LLP) and the Private Limited Company. While both offer limited liability and legal recognition, they differ significantly in terms of formation, compliance, taxation, and ownership structure.

This guide will walk you through the key differences between LLP and company, covering aspects like cost and ease of incorporation, compliance requirements, and their advantages and disadvantages, so you can decide what suits your business best.

1. Cost and Ease of Incorporation

LLP Incorporation

• Incorporation Cost: Lower than a private limited company. Government fees are modest, especially for firms with capital under ₹10 lakh.

• Time Required: Generally faster. It takes around 7–10 working days if documentation is in order.

• Requirements: Requires at least two Designated Partners, one of whom must be an Indian resident. No minimum capital requirement.

Private Limited Company Incorporation

• Incorporation Cost: Slightly higher due to ROC charges, digital signature, and name reservation fees.

• Time Required: Takes about 10–15 working days, depending on approval timelines from the MCA.

• Requirements: Minimum two directors and two shareholders, with a registered office in India. Again, no minimum capital is required now.

Verdict: If you want a cost-effective and simpler setup, LLP is generally more suitable for service providers, consultants, and family-run businesses.

2. Cost and Ease of Compliance

LLP Compliance

• Annual compliance includes:

  • Form 8 (Statement of Accounts & Solvency)

  • Form 11 (Annual Return)

  • Income Tax Return (ITR-5)

• Audit Requirement: Mandatory only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.

• Cost: Compliance costs are lower as ROC filings are fewer and simpler.

Company Compliance

• Annual compliance includes:

  • Form AOC-4 (Financial Statement)

  • Form MGT-7 (Annual Return)

  • Board Meetings, AGM, and maintenance of statutory registers

• Audit Requirement: Mandatory from the first year, regardless of turnover.

• Cost: Higher due to complex reporting requirements and the need to appoint an auditor mandatorily.

Verdict: LLP wins on ease and affordability of compliance. Companies offer more robust governance, but with added cost.

3. Advantages and Disadvantages

Advantages of LLP

• Less compliance and cost

• Flexible profit-sharing structure

• No mandatory audit below thresholds

• Suitable for professional services, startups, and small businesses

Disadvantages of LLP

• Cannot raise equity funding from investors or venture capitalists

• Limited scope in scaling or listing publicly

• Less brand credibility compared to a company

Advantages of Company

• Can raise funds via equity shares

• Stronger brand perception and trust

• Mandatory audits and disclosures increase transparency

• Suitable for startups looking to scale and attract investors

Disadvantages of Company

• Higher compliance burden

• Increased cost of operation

• Directors can be held liable for certain defaults

Verdict: If you’re bootstrapping or running a professional practice, an LLP is easier to manage. But if you’re building a scalable, investor-backed startup, a private limited company is better aligned with growth goals.

Conclusion

There’s no one-size-fits-all structure. The difference between LLP and company lies in how you intend to operate and grow your business. LLPs offer flexibility, cost-effectiveness, and ease of maintenance. On the other hand, private limited companies provide better scalability, access to capital, and a robust legal framework.

Need Help Choosing Between LLP and Company?

At Tradeviser, we help you not only register your business entity but also understand what works best based on your goals, capital, and compliance capacity. Whether it’s LLP formation, private limited incorporation, or post-registration compliance, we’ve got you covered.

Talk to our experts now for a free consultation and get your business structure right from Day 1.