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Advantages of Private Limited Company Over Limited Liability Partnership

Private Limited Company Registration over Limited Liability Partnership Registration in India

Private Limited Company Registration over Limited Liability Partnership Registration in India

With the new GPR initiative by the ministry of corporate affairs, the company incorporation process in India is experiencing a transformational change. As per the latest amendment rules, the fee charged at various stages Pvt Ltd company registration in India are eliminated and however, the stamp duty for the same is still live. With the smooth and speedy process of Pvt Ltd company registration in India, entrepreneurs are inclining towards private limited company over limited liability partnership.

Funds 

Funds are all-time need of any company as a part of growth and expansion process. Raising funds is easy in the case of a private limited company when compared to LLPs. Being compelled by many regulations; the private limited company exhibits the highest transparency in their activities. Due to a lot of trust on the private limited companies, they can easily raise funds from the venture capitalists, members and even by the foreign companies. Investors are ready to invest funds in these companies as compared to LLPs. 

Recognition

This is another significant advantage of the incorporating private limited company over LLP Company Registration. When it comes to recognition, the private limited company stands way ahead of the limited liability company. Recognition of private limited company impacts the procurement of external funds. Though both the type of companies have a separate legal entity, LLP companies have limitations on debt-equity and liquidity aspects. In the case of mismanagement, the liability of partners is technically unlimited.

Affordability of incorporation

The zero-fee concept of the recent online private limited company registration, there is a thin line of difference in the cost of incorporation between LLP and private limited company but, the ease of doing business is more in case of a private limited company. The procedural aspects of the incorporation of a private limited company have made easy. 

Liability 

A private limited company has separate entity from its members so, its liability would be separate from members. The company has sole responsibility for the debts taken, and the members are free from it. In the case of LLP, it also enjoys a separate legal entity, but in terms of liability, the members will have unlimited liability in case of oppression and mismanagement.

Compliance 

Both LLPs and private limited companies have different regulatory compliance after online private limited company registration. A private limited company has to comply with few standards like accounting and auditing, whereas LLP has little compliance in place. In case of non-compliance of mandatory regulation, the member of a private limited company will enjoy some reliefs, but in the case of LLPs, the compounding penalties are high. There are chances of a designated partner from getting expelled. 

Global expansion 

A private limited company can raise funds from foreign capital without any government approval. It opens doors for direct foreign investment, and it will be easy for the entrepreneur to take the business overseas. A private limited company has an excellent opportunity to expand the business at the international level as compared to LLPs. The accesses of bringing foreign funding into LLP is the more complicated and regulated procedure.

Diversification 

Private limited companies have no strict regulations in place for diversification. The agreements bind LLP so, a modification in the agreement is a must for diversification. For business diversification, LLPs has to undergo a long, tedious process and comply with a lot of statutory provisions. 

More sale value 

In case an entrepreneur decides to sell his company, a private limited company will sell at a higher value when compared LLPs as it gain a higher reputation in the market. The entrepreneurs are more interested in purchasing a private limited company when starting a new business.

14 Jan

Akash Rai
Akash Rai

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