VS
The default choice depends on whether you plan to raise external capital. Pvt Ltd wins for VC-track startups; LLP wins for service partnerships.
Pick Private Limited Company when
You plan to raise VC / institutional funding
You want to issue ESOPs
You expect 50+ shareholders eventually
You need credibility with corporate buyers
Pick LLP when
You run a professional service firm (lawyers, CAs, agencies)
You have 2-10 partners with no fundraising plans
You want lower annual compliance burden
Your turnover stays below ₹40 lakh for first 3 years
Feature
Private Limited Company
LLP
Minimum members
2 directors + 2 shareholders
2 designated partners
Govt fee at incorporation
₹1,500-3,000 (capital-dependent)
₹500-2,000
Authorised capital limit
Yes (default ₹15L for ₹1k fee)
No concept of authorised capital
Annual compliance cost
~₹8,000-15,000
~₹4,000-7,000
Statutory audit
Mandatory always
Only above ₹40L turnover OR ₹25L contribution
AGM mandatory
Yes (within 6 months of FY end)
No
ESOPs allowed
Yes
No (but profit-sharing possible)
VC funding eligible
Yes — preferred structure
Difficult — VCs rarely invest in LLPs
Tax rate on profits
22% (under new regime, no exemptions)
30% flat
Dividend tax
In hands of shareholder at slab rate
No DDT — partner share is profit
Liability protection
Limited to share capital
Limited to contribution
Conversion possibility
Pvt Ltd → LLP via Form 18
LLP → Pvt Ltd via URC-1
Technically yes, but most Indian VCs (Blume, Sequoia, Accel, Lightspeed) only invest in Pvt Ltd. They need preference shares, ESOP pools, ratchets — none possible in LLP structure.
Depends. Pvt Ltd at 22% (new corporate regime) + no DDT vs LLP at 30% flat. For service businesses with 100% profit distribution, LLP often nets higher take-home (no double taxation).
Yes — Section 366 conversion via URC-1. Takes 30-45 days, ₹14,999 + govt fees through us. Contracts and assets carry over seamlessly.
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