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LLP or Pvt.Ltd.Co.

Ankur Jalan (Article Assistant ) (345 Points)

16 October 2018

Although there are few or may be none but i presume there must be some demerits of LLP in comparison to pvt.ltd.co. can anyone help to point out some ?

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Bhanu (hyderabad) (1651 Points)
Replied 16 October 2018

If a partner wants to transfer his/her ownership rights then he/she has to obtain the consent of all the partners, which generally not an easy task.

There are many partners involved in the business, amongst whom the risk can be diversified .
If you are a start-up or company who is looking to raise funds from the angel investors or the venture capitalist, then you cannot register a LLP because LLP does not support funding. The prime reason behind this disadvantage is that the ownership of LLP is classified as interest and not as shares and cannot be offered to investors in return for the required funds.

Only a limited company offers this advantage of raising funds in India and hence, if you are a start-up and willing to raise funds, then you need to register a private limited company instead of LLP.

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Puja Sharma (CA) (433 Points)
Replied 16 October 2018

https://www.caclubindia.com/experts/difference-between-company-llp-544625.asp

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Rakesh Joshi (CA Final) (1272 Points)
Replied 16 October 2018

a. Easy formation process compared to company formation.

b. No DDT.

c. Partners will be having management control.

d. Agreements can be modified depending upon the requirement ( with the concent of partners ).

e. Comparably easy winding up procedures.

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Bhanu (hyderabad) (1651 Points)
Replied 16 October 2018

you explained about advantages of llp
but query is related to disadvantages @ rakesh joshi

Rakesh Joshi (CA Final) (1272 Points)
Replied 16 October 2018

I think company will have more demerits than being an LLP... thats why... 😉 If not relevent then kindly ignore my points..

Amish Maknojia (Student) (507 Points)
Replied 17 October 2018

hi
you can refer to my blog for brief on advantage and disadvantage
https://idealconsultax.blogspot.com/2018/06/starting-new-business-whether-to-form.H T M L

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Ankur Jalan (Article Assistant ) (345 Points)
Replied 17 October 2018

can sections 40(b), 78(1), 167C of Income tax act plays a role in putting pvt ltd co. above LLP?
40(b)(v) disallowance of remm to partners above prescribed book profit hence taxing at 30%
78(1) firm cannot c/f losses of retired or deceased partner
167C override entire LLP act to recovery tax intt penalty ....