25 Apr 2025
Starting your business in India can be a great initiative as
India is one of the top growing countries. Starting a Company either Private
Limited Company or Limited Liability Partnership can help you with numerous
benefits but its registration process may seem difficult and complex for some
individuals. In this article you’ll get complete detail related to Company
Registration in India including the major difference between Private Limited
Company and Limited Liability Partnership.
What is Company Registration?
Company Registration is the legal registration process of a
company either Private Limited Company or Limited Liability Partnership with
Government. Individuals can start their company depending on their business
idea or goal. Pvt Ltd Company and LLP are two most popular and growing business
entities in India. Let’s understand what is Private Limited Company and Limited
Liability Partnership.
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Private Limited Company: A Private Limited Company
commonly known as Pvt Ltd Company is a business entity which is owned privately
depending on the shares. It has limited liability which allows its owner to
protect their personal assets from the company's debt.
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Limited Liability
Partnership: A
Limited Liability Partnership commonly known as LLP in India. As the name
suggests, LLPs are owned by partners and these partners have limited liability
depending on their capital contribution which means they are only liable for
the amount they have contributed. There can be a minimum of 2 partners in an
LLP.
Private Limited Company V/S
Limited Liability Partnership
Private Limited Company and Limited Liability Partnership
both business structures have its unique advantages and disadvantages. It
totally depends on your business goal which entity suits you the most. For
better understanding which business structure is more suitable for you, read
the following differences between Pvt Ltd Company and LLP carefully:
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Basis
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Pvt Ltd Company
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Limited Liability Partnership
|
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Governing Act
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Private limited companies must register themselves under
the Companies Act, 2013. They are required to register themselves with ROC on
the MCA portal.
|
LLPs are required to get themselves registered under the
Limited Liability Partnership Act, 2008. They are required to register
themselves with ROC on the MCA portal.
|
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Suffix
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‘Private limited company’ or ‘Pvt Ltd Company’ must be
added as suffix
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‘Limited Liability Partnership’ or ‘LLP’ must be added as
suffix
|
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No of shareholders/partners
|
Minimum 2 shareholders are required and Maximum 200.
Also, there should be a minimum of two directors and maximum it can be 15
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To start the functioning of the LLP firm, a minimum two
designated partners are required. However, there is no upper limit of
partners in LLP.
|
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Management
|
In Pvt Ltd Companies, the decision is made by the
directors.
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However, LLPs are managed by the designated partners
& all the required decisions are
made by the Partner’s Consent.
|
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Annual General Meeting
|
Pvt Ltd Company must conduct an AGM four times every year
in the presence of the Board of Directors.
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AN AGM is not required for Limited Liability Partnership.
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Tax audit Requirement
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In a Private Limited Company, a Tax Audit is mandatory
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Tax Audit in LLP is only required when the turnover
exceeds ?40 lakh & the capital contribution ?25 lakh.
|
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Taxation
|
Private Limited Company have to pay 25% tax if they earn
less than ?400 crores but if they earn more than that then they have to pay a
total 30% of the income.
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In LLP, the tax rate is fixed. LLP should pay 30% tax on
its total income.
|
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Venture Capital or IPO
|
Private Limited Company is allowed to raise funds from
venture capital or do IPO.
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It is not allowed to use venture capital or do IPO in an
LLP
|
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Restriction on Directors or Partners
|
There are certain restrictions on the directors to enter
into certain agreements with parties who deal with loans or guarantees to
other companies.
|
There is no restriction on partners to enter into an
agreement.
|
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Dissolution
|
It
is a complex process to dissolve the Pvt Ltd Company as it includes a time
taking process.
|
The
process to dissolve an LLP is easy as compared to a Pvt Ltd Company.
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Documents Required for Company
Registration in India
In order to register a Company in India, certain documents
are required. These documents are usually the same for Pvt Ltd Company &
LLP but the difference is for Private Limited Company documents are required
from Directors/Shareholders while for Limited Liability Partnership documents
from Partners are required. Following is the list of documents required for
Company Registration in India:
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Passport Size Photograph: Passport Size Photograph is
required from Director/Shareholders or Partners depending on your Business
type.
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Identity proof: One Identity Proof is
required from Director/Shareholders or Partners. It can be either Aadhaar Card,
PAN Card, Voter ID Card, etc. In case of Foreign Nationals, NRIs, a Passport is
required.
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Address Proof: Director/Shareholders or
Partners residential proof is required. It can be any utility bill such as
electricity bill, telephone bill, water bill, etc. Make sure this bill is not
older than 2 months.
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Contact Details: Contact Details of
Director/Shareholders or Partners are required including their Phone Number,
Email Id, etc.
Other Documents:
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Company Address Proof: Address proof is required
where the office is registered. It can be any utility bill not more than 2
months older. It can be Water Bill, Telephone Bill, Electricity Bill, etc.
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Proof of Ownership: Proof of land Ownership is
required where the office is registered. In case of rented property NOC from
the owner is mandatory along with Rent Agreement.
Company Registration Process
The Process of Company Registration includes multiple steps
and the registration process for Private Limited Company and Limited Liability
Partnership is quite different. Following is the process of Company
Registration:
For Private Limited Company:
Step 01: Obtaining Digital
Signature Certificate: To register a Private Limited Company, the first step is to
obtain Digital Signature Certificate of all the Directors.
Step 02: Obtaining Director
Identification Number: Next, you need to obtain DIN i.e, Director Identification
Number for all proposed Directors of the Private Limited Company.
Step 03: Name Reservation: Once you obtain the DSC &
DIN, reserve a unique name for your Private Limited Company using RUN (Reserve
Unique Name) form.
Step 04: Prepare MoA &
AoA: After
successfully getting the name for your company, prepare the MoA & AoA for
your Private Limited Company including the company’s objective, rules, roles
& responsibility.
Step 05: Filing Incorporation
Form: Once
the MoA & AoA is prepared, filing of Incorporation Form will be started. It
includes multiple details of Shareholders/Directors of the Company including
their documents.
Step 06: Final Approval: Once you submit the
application, pay the required fee and on the final verification RoC will issue
the certificate of Incorporation.
For Limited Liability
Partnership:
Step 01: Name Reservation: To register an LLP in India, reserve the name for your
LLP that should be unique and easy to recognise. Using RUN-LLP Form one can
reserve their LLPs name.
Step 02: Obtain DSC: Next, obtain Digital
Signature Certificate of all the partners within the LLP. If any partner has a
valid DSC then they do not need to obtain DSC again.
Step 03: File Incorporation
Form: Once
you obtain the DSC of all partners, fill the Incorporation form which is FiLLiP
(Form of Incorporation of Limited Liability Partnership).
Step 04: Final Approval: Once you fill the form, make
the required payment and on the final verification of RoC, you’ll get your
Certificate of Incorporation.
Step 05: Submit LLP
Agreement: The
process does not end here, next you need to prepare the LLP Agreement
containing all the rules, roles & responsibilities of all the partners.
This LLP Agreement should be submitted to the Government within the 30 Days of
Incorporation.
Conclusion
Company Registration in India is one of the complex processes
as it includes multiple documentation. These documents should be correct and up
to date otherwise it can increase the chances of rejection of your application.
Individuals can register their company in India as Private Limited Company or
Limited Liability Partnership as they are the top most preferable company
structure. Before registering a company in India, it is better to understand
the major difference between Private Limited Company or Limited Liability
Partnership as it can help you in understanding which one is better for your
business idea.
Frequently Asked Questions (FAQs)
1.
What is Company Registration
in India?
Company Registration in India is the
process of incorporation either Private Limited Company or Limited Liability
Partnership in India.
2.
Can a private limited company
have foreign directors and shareholders?
Yes, there is no restriction on the
nationality of directors and shareholders in a private Limited company
registration. However, foreign entities and individuals must notarise their
documents before submission.
3.
What is the minimum capital
for LLP registration in India?
For the LLP registration, no minimum
capital is required; it can be incorporated with the least possible capital.
4.
Can a person already in Job
be a director in a private limited company?
Yes, a person already in employment
can be a director in a company. However, they need to check their employment
terms first.
5.
Is GST required for LLP?
GST requirement for LLP is based on
turnover and the services or goods that LLP offers. It is not a mandatory
requirement.
6.
Can an LLP be called a
company?
No, as per act 2008, an LLP does not
include the features of a company.
7.
Which is better, LLP or
Company?
Both, LLP and Company have their own unique features
and both are perfect at their own place. It depends on your business needs and
idea.