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In this article we will analyze the differences between a Private Limited Company (PLC) and a Limited Liability Partnership (LLP). To begin with, a PLC is a privately held company which is a preferred mode for doing any business, while an LLP is a business started by a minimum of 2 people. In both cases, the liability of the members is limited.

From a Income Tax perspective, it is advisable for residents to register a LLP than a PLC. Since dividend distribution tax is not applicable for LLP, any profit drawn by partners of LLP are tax exempted.

What are the main similarities between a PLC and an LLP?

  1. Firstly, both have the status of being a separate legal entity. This means that both a PLC and an LLP have their own legal identity in the eyes of the law.

  2. Both a PLC and an LLP are eligible for certain tax benefits.

  3. As mentioned earlier, the liability of the members in both cases is limited.

  4. Both the PLC and LLP are required to register themselves with the Ministry of Corporate Affairs (MCA).

  5. Both PLC and LLP can be registered as start up.

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