Company Vs General Partnership Firm Vs Limited Liability Partnership

 

Selection of business entity is made after taking into account factors which includes objectivity of the founder, capital required and available, ownership and management control and such other factors. Hence a general comparison is being provided between three different forms of business entity with the objective to aid users in their selection process.

Basis of Distinction	Company	Partnership Firm	Limited Liability Partnership
Registration	Compulsorily required with ROC. Certificate of Incorporation is to be obtained	Optional. Unregistered firms will not have the right to sue	Compulsory
Separate Legal Entity	It is separate legal entity, separate from its member, directors. Limited to the extent of unpaid capital.	It is not separate legal entity from partners. Liability can be extended to the personal assets of the partners.	It is separate legal entity, separate from its partners\ designated partners. Liability limited to the extent of contribution to LLP
Minimum Capital requirement	Minimum paid up capital of Rupees One lac for incorporation of Private company and Rupees five lacs for incorporation of Public Company to be required.	Not Specified	Not Specified
No. of shareholders / Partners	In a Private Company, minimum of two and maximum of fifty shareholders. In case of Public Company, minimum of seven and no maximum limit specified	Minimum of two for all firms. Maximum of ten, in case of banks and twenty in case of others.	Minimum of two and no maximum limit specified
Contracts / Business transaction by Member/ Directors/ Partners	A director \ member can enter into contract with the company	A partner can not enter into contract with the firm	A partner can enter into contract with the LLP
Ownership of Assets	The company has ownership of assets and members only have shares in the company	Partners have joint ownership of all the assets	The LLP has ownership of assets and Partners only have capital contribution in the LLP
Taxability	The income is taxed at 30% rate	The income is taxed at 30% rate	The income is taxed at 30% rate
Manner of Keeping Books of Accounts	Accrual basis	Cash basis or accrual basis	Cash basis or accrual basis
Filing of Annual Accounts	Balance Sheet and Profit and loss account are required to be filed with the ROC annually in the prescribed format	Not specified	Statement of accounts and solvency are required to be filed with ROC annually in the prescribed format.
Audit of Accounts	Accounts have to be audited compulsory on annual basis	The Audit of accounts is compulsory if total sales, turnover or gross receipts exceeds Rs.60 lacs in any financial year	Accounts to be audited annually except for LLP’s having turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year.
Electronic filing of documents	Any documents required to be filed / recorded / registered has to be e‐filed through affixing digital signature	Any documents required to be filed / recorded / registered has to be submitted manually.	Any documents required to be filed / recorded / registered has to be e‐filed through affixing digital signature