Which is better llp or pvt ltd company in terms of taxation

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mayur babanrao jadhao

engineer

25 Points Posted on 27 June 2012

Dear all

i want to start my own bussiness with my wife. investment will around 5lac, we will also increse partner in an year.

1.what % of tax on profit need to pay to director in both llp and pvt ltd company

2.if we dont want to increse directors but would like to increse share holder, is it possible?

3.Registration part should i give to outside agency or its easy process to register ?

4.i am expecting tourover in 2nd yr above 30lac, will tax percentage increase?

5. which are important things where i should have look

Replies (2)

Manjunatha M K

Manager - Accounts

318 Points Posted on 28 June 2012

Dear Mayur,

1. Tax percentage for LLP & Pvt Ltd Co is same 30%.

2. Yes it is possible.

3. Since Both LLP & Pvt Ltd Co requires attestation for varios documents, it is better to outsource.

4. Tax percentage will not Increase.

5. Important Point to look in to:

a) there is no restriction on number of partners in LLP. But Max share holder in Pvt Ltd is 50.

b) there is no tax on distribution of profit in LLP, But there is dividend distribution tax applicable to Pvt Ltd Co.

c) There is restriction on Partners remuneration in LLP for Income Tax purpose (i.e based on Profit). But there is no restriction on Remuneration payable to Directors of Pvt Ltd (But should be reasonable).

d) audit of books of accounts is compolsory for LLP only if turnover exceeds 1crore (As per Income Tax). But audit is compolsory for Pvt Ltd every year.