Choosing between a Private Limited Company and an LLP is one of the first — and most important — decisions for any Indian startup. Here's an honest comparison to help you decide.
At a glance
| Factor | Private Limited Company | LLP |
|---|---|---|
| Governed by | Companies Act, 2013 | LLP Act, 2008 |
| Minimum members | 2 directors, 2 shareholders | 2 designated partners |
| Tax rate | 25% (domestic, turnover < ₹400Cr) | 30% flat |
| Dividend tax | Applies on distribution | No dividend distribution tax |
| Angel / VC investment | ✅ Easy to raise equity | ❌ Very difficult |
| ESOP / equity to employees | ✅ Possible | ❌ Not possible |
| Startup India / DPIIT | ✅ Eligible | ✅ Eligible |
| Audit requirement | Mandatory always | Only if turnover > ₹40 lakhs |
| Annual compliance cost | ₹15,000–30,000 | ₹8,000–15,000 |
| Incorporation cost at GovYapar | ₹6,999 | ₹4,999 |
Choose Private Limited if…
- You plan to raise angel or venture capital — investors can only hold equity shares, not LLP units
- You want to issue ESOPs to employees as part of compensation
- You're building a product company that may be acquired someday (acquisitions are simpler with shares)
- You want credibility with larger enterprise customers — most procurement policies prefer "Pvt Ltd"
- You're applying for government tenders that require company registration
Choose LLP if…
- You're a professional services firm — CA practice, law firm, consulting, architecture
- You have no plans to raise equity investment and will bootstrap
- You want lower compliance overhead — no board meetings, fewer ROC filings
- You want to distribute profits flexibly without dividend tax complications
- Your business is a family business or partnership formalising an existing arrangement
📊 GovYapar's recommendation: If you're building a tech startup, SaaS product, or any business where you might raise funding in 2–3 years — go Pvt Ltd. The lower compliance cost of LLP rarely justifies losing the ability to raise equity capital.
Compliance calendar comparison
| Filing | Pvt Ltd | LLP | Deadline |
|---|---|---|---|
| Annual return | MGT-7 | Form 11 | 60 days from AGM |
| Financial statements | AOC-4 | Form 8 | Within 30 days of AGM / 30 Oct |
| Income tax return | ITR-6 | ITR-5 | October 31 |
| Board meetings | Minimum 4/year | Not required | — |
| Audit | Always mandatory | If turnover > ₹40L | Before ITR |
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