Which Form of business is better? Private Limited Company or LLP

There are many entities operating in India which can be used for listing of companies. These have their own structure and functioning way. Sole Proprietorship is one way of doing business in which the regulatory obligations are minimal. But in case of sole proprietor model the company is not having its own existence.

The proprietor and the company share all the legal and financial provisions and compliance. Thus in order to safeguard the assets of the owner, it becomes important to limit the boundaries of business into a separate entity. This can be done only through the registration of companies.

Limited Liability Partnership

The business can be registered in the form of LLP which is Limited Liability Partnership. In case of LLP, there is a formation of an entity which can be viewed as a separate entity than the owner. The LLP has its own legal and compliance regulations which are different from the directors/ partners. The LLP Act has been introduced in 2008 which mentions the flexibility of the entrepreneurs to function as traditional partners and at the same time providing them the necessary benefit of the corporate.

Further the LLP structure may not be suitable enough for some businesses. The regulatory and compliances which in case of the private limited company is stringent but has more safeguards provided to make secure the interest of the directors. The private limited companies need to follow the accounting standards which is not in the case of LLPs. In the case of non-compliances the penalties are very heavy in case of LLPs, however, the risk is mitigated by designated partners getting disbarred in the case of failure of compliance.

Read Also: Easy Guide to Convert LLP into Private Limited Company

Private limited company

A private Limited Company is a registered entity which has strict compliance and regulatory norms and follows the accounting standards. The regulatory part of the organisation hence formed has a direct relationship with the fundraising and procurement process.

As the Private limited company has directors with limited shares and hence the debt/equity ratio and liquidity is unaffected in case of non-compliance or any other regulatory issue. In case of limited liability partnership, these ratios are not defined and hence in case of oppression or mismanagement, the limited liability partnership can suffer as the liability is technically unlimited and is not bounded by shares.

Read Also: All About Name Change of Limited Company (Provisions & Procedure)

Thus, it solely depends upon the partners/ directors and the regulatory needs of the entity formed with respect to the business plan and the regulatory and statutory support needed to fulfil those plans. The business person can choose from these different forms of business structure.

Comments

GST: Assessees Must E-file Their Tax Returns by 30th Nov 2024 to Claim Pending ITC

If you are a GST-registered assessee you need to consider the due date to avail of any due Input tax credit or revised errors/omissions for the FY 2023-24 is November 30, 2024, via submitting the appropriate GST forms. Missing the due date can produce an outcome of a financial loss as the unclaimed ITC could not be used to offset your output tax obligation. What is the Method to Claim the Due ITC or Revised GST Errors for the FY 2023-24 It was stressed by the tax experts that the GST law specifies the procedure to claim the due ITC via GSTR-3B and amend errors in GSTR-1. Filing GSTR-1: Errors induced in GSTR-1 can be rectified by making amendments in the following GSTR-1 filings. Filing GSTR-3B: Via the GSTR-3B return the obligated ITC can merely be claimed. November 11, 2024, was the due date to submit the GSTR-1, and November 20, 2024, is for GSTR-3B without any penalty. Both the outcomes can be provided till November 30, 2024, as per the late fees. R...

How ITR Software Assists Individuals in Filing Tax Returns

Every assessee's process of income tax return (ITR) filing is significant, as it contributes to Indian's economy. The Income Tax Department has made efforts to facilitate this approach in recent years, but numerous people still see themselves steering a difficult financial system, multiple tax deductions, miscellaneous exemptions, and changing tax laws. This complexity can turn what must be an easy task into a significant challenge. In this context, income tax software evolves into an important partner, presenting a useful variety of accuracy, efficiency, and reassurance. The software enables return filing that permits taxpayers to handle their financial responsibilities when complying with the law. 1. Accurate Tax Calculations An incorrect income tax calculation of taxes could result in messages from the Income Tax Department or missed refunds. The tax software helps in finding taxable income and tax deductions that you may be allowed, like insurance or home loans. The co...

Major Income Tax Rule Changes to Simplify Return Filing

Income Tax Return Filing- The normal Income tax return filing due date for AY 2024-25 ended on July 31, 2024. On December 31, 2024, the due date to file a belated ITR with a penalty amount of Rs 5000 will end. The Income Tax Department after the July 31 deadline will provide different categories of taxpayers with specific deadlines to furnish income tax return filing (ITR) . For instance, the tax department has extended the ITR filing date for those who require the audit of their accounts from 31st October 2024 to 15th November 2024. Below we talk 5 amendments in the rules of the income tax concerning tax returns filing via the taxpayers. With New Form 26AS Improved Tax Transparency The introduction of the new Form 26AS furnishes the complete data to the taxpayer along with the details of tax deductions or collections at source, demands, payment of taxes, specified financial transactions (SFTs) and refunds. Also, the inclusion of SFT data assures that the taxpayers know about their tra...

SAG Infotech: Need Tax Software (Call 0141-4072000)

Search This Blog