Registering a business in India is a significant step toward establishing a legitimate and scalable entity. Two popular options for registration are a Private Limited Company (PLC) and a Limited Liability Partnership (LLP). While both offer unique benefits, their registration processes, compliance requirements, and llp government fees differ. Here’s a comprehensive guide to help you choose the right structure and understand the costs involved.
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Private Limited Company (PLC)
A Private Limited Company is one of the most common business structures in India. It is ideal for startups and businesses planning to scale quickly and attract investors.
Key Features of a Private Limited Company:
- Limited Liability: Shareholders are only liable to the extent of their shareholding.
- Separate Legal Entity: The company has its own legal identity, distinct from its owners.
- Easy Fundraising: Venture capitalists and angel investors prefer PLCs due to structured compliance.
- Ownership Restrictions: A minimum of 2 and a maximum of 200 members can own the company.
Government Fees for Private Limited Company Registration
The registration fee depends on the company’s authorized capital:
- Up to ₹1,00,000: ₹4,000
- ₹1,00,001 to ₹5,00,000: ₹5,000
- ₹5,00,001 to ₹10,00,000: ₹10,000
- Above ₹10,00,000: ₹2,000 for every additional ₹10 lakh
Other charges include:
- Digital Signature Certificate (DSC): ₹500-₹2,000 per director
- Director Identification Number (DIN): ₹500 per director
- Name Reservation: ₹1,000
- Stamp Duty: Varies by state
Limited Liability Partnership (LLP)
An LLP is a hybrid structure that combines the flexibility of a partnership with the benefits of limited liability. It is suitable for small businesses and professionals.
Key Features of an LLP:
- Limited Liability: Partners’ liabilities are limited to their contributions.
- No Minimum Capital: There is no requirement for minimum capital investment.
- Simpler Compliance: LLPs have fewer compliance requirements compared to PLCs.
- Flexible Management: Partners can directly manage the business without a board of directors.
Government Fees for LLP Registration
- Up to ₹1,00,000 Contribution: ₹500
- ₹1,00,001 to ₹5,00,000 Contribution: ₹2,000
- ₹5,00,001 to ₹10,00,000 Contribution: ₹4,000
- Above ₹10,00,000 Contribution: ₹5,000
Additional costs:
- Digital Signature Certificate (DSC): ₹500-₹2,000 per partner
- Name Reservation: ₹200
- LLP Agreement Stamp Duty: Varies by state and contribution amount
Comparison: Private Limited Company vs. LLP
| Feature | Private Limited Company | Limited Liability Partnership |
| Legal Entity | Separate legal entity | Separate legal entity |
| Liability | Limited to shareholding | Limited to contribution |
| Compliance | High (board meetings, audits) | Low (fewer filings) |
| Taxation | Corporate tax rates | Partnership tax rates |
| Ownership | Restricted to 200 members | Unlimited partners |
| Fundraising | Easier (equity and debt options) | Difficult (limited investor interest) |
| Registration Fees | Higher | Lower |
Steps for Registration
- Choose a Business Structure: Decide between a Private Limited Company and an LLP based on your business needs.
- Reserve a Name: Apply for name reservation using the RUN(Reserve Unique Name) service.
- Obtain Digital Signatures (DSC): Required for e-filing registration forms.
- File Incorporation Forms:
- For PLC: File SPICe+ (Simplified Proforma for Incorporating a Company Electronically).
- For LLP: File FiLLiP (Form for Incorporating LLP).
- Draft and Submit Documents: Memorandum of Association (MOA) and Articles of Association (AOA) for PLC or LLP Agreement for LLP.
- Pay Fees and Stamp Duty: Complete the payment as per the authorized capital or contribution.
- Receive Certificate of Incorporation: Upon approval, you’ll receive the Certificate of Incorporation, along with your Company Identification Number (CIN) or LLP Identification Number (LLPIN).
Conclusion
Both Private Limited Companies and LLPs have their unique advantages, and the right choice depends on your business goals, scalability, and compliance capacity. While PLCs are ideal for startups and businesses aiming for rapid growth, LLPs are better suited for small enterprises and professional firms seeking flexibility with lower compliance requirements. Understanding the registration process and associated government fees can help streamline your business journey and ensure compliance from the outset.
