WHY PRIVATE LIMITED COMPANY OR LLP IS PREFERRED?

WHY PRIVATE LIMITED COMPANY OR LLP IS PREFERRED?

For the business start-up, both private limited company and LLP are preferred. But when it comes about the comparison between the both, LLP is best suitable for start-up. The reasons why private limited company or LLP is preferred are as following:

1. Initially, the important preferential factors which is considered with the private limited company or LLP has with the advantage of limited liability and separate assets and liabilities, distinct from that of its promoters or directors.
2. The second preference is with the limited capital and as in LLP or private limited company they both can be raised easily.
3. With the growth prospects, usually the LLP or private limited company converts soon after starting their business as a proprietorship, to overcome the business of team work and resources.
4. The continuity of the business, which totally depends upon the proprietors, in the absence or unavailability of these proprietors, the business, will suffer the great loose upon the extent. Therefore, the business continuity is limited unlike a LLP or private limited company.Private limited company offers its promoters a better image or standing than that of LLP. Private limited company also enjoys better access to funding from bank and foreign direct investors.

In case of private limited company and LLP the preferential conditions will considered apart from above mentioned aspects too. Private limited company has been in existence for the longer than LLP’s and enjoy widespread recognition in India and the world. Therefore there are well established processes and procedure for private limited company.

LLP’s on the other hand is recently introduces in India. Therefore, some of the rules, regulations, process are still continuing to evolve. LLP’s are also not recognised in India as a private limited company, since it is relatively a new concept.

Private limited company offers its promoters a better image or standing than that of a LLP. It enjoys the better access to funding from banks and foreign direct investments.

Author: This blog is written by Ms. Deepshikha Dabi, student of Vivekananda Institute of Professional Studies, a passionate blogger & intern at  Aapka Consultant.

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