Which Is a Better Option for Startup Registration: PVT LTD or LLP?

With every second person around you gushing about their "Startup" ideas, you must be wondering what this word actually means! Even if you are well-versed with what a Startup stands for, it is quite common to wonder what purposes these Startups serve for the aspiring youth and the economy of the nation.

A Startup is a company at the very starting stages of its operations. Any budding entrepreneur can come up with a unique Startup idea. But a Startup will garner the attention of investors and gather investments only if there is ample demand for the products and services that it is offering.

For those aspiring entrepreneurs who dream of making it big in life one day, the question of whether to opt for a Private Limited (PVT LTD) or a Limited Liability Partnership (LLP) may sound quite perplexing. But their future career graph depends on this decision to a great extent; hence, it is of utmost significance to understand each of these business structures closely. 

Why Are PVT LTD Companies More Popular Than LLPs?
Close attention to recent trends reveals that PVT LTD companies are enjoying an upper hand over the LLPs. As per the Ministry of Corporate Affairs data, in 2021 itself, around 1,40,617 PVT LTD companies had been established as compared to the 43,633 LLPs. On the other hand, public and OPCs account for just 3,226 and 9,440 incorporations in the year 2021.

Multiple reasons portray PVT LTD companies as a better option than the Limited Liability Partnerships. 

Data Source: www.mca.gov.in   

For instance, the former business structure was first introduced back in 1956. Since entrepreneurs are more well-versed with the former, they find the structure more reliable. It won't be wrong to say that a PVT LTD company structure facilitates easy growth, better sales and higher turnovers, just like the fact that higher-aged, forty-ish startup founders enjoy a better startup success rate because they are well-acquainted with their strengths as well as know the art of delegation. There is definitely something with numbers when it comes to startups – the higher, the better!

LLP is comparatively a newer concept (introduced in 2008) and therefore seems a bit distant and unfamiliar.
Another significant reason PVT LTD companies appeal to entrepreneurs is that they can own equity shares. But this feature is missing in the case of LLPs. Also, the rate of income tax return that one needs to pay to the Government of India is 25% in the case of Private Limited. The same stands at 30% for the Limited Liability Partnership.

Because of these differences, PVT LTD companies are gradually becoming the first choice of entrepreneurs. The proof lies in front of you – giants like Quikr, Nykaa, Curefit and Zoho - all are private limited companies. 

Why Are Entrepreneurs Opting for a PVT LTD Company Set Up Even Though It Ends Up on the Pricier Side?
Over the last couple of decades, India has witnessed an upsurge of Startups, thereby booming India's Startup economy. In the first half of 2022, India has got around 14 unicorns, which is quite impressive and stunning in India's Startup performance. 
Now the million-dollar question arrives! 

How many of these Indian Startups are the PVT LTD ones?

Well, the two most popular food delivery apps that Indians have been using – Zomato and Swiggy, are Private Limited Companies. Similarly, brands like BOAT, BHARATPE, LENSKART, BYJU'S, MEESHO, MAMAEARTH, PURPLLE, MAKEMYTRIP, BIG BASKET, UNACADEMY, FIRSTCRY etc. – all follow the PVT LTD setup. The list, in fact, is never-ending because more and more brands and companies are choosing a Private Limited business setup over the LLPs.

Why, You Ask?
Well, when one of your close ones falls ill, do you visit a government hospital with average amenities or a private hospital with world-class facilities? Despite the fact that the latter charges skyrocket medical treatment fees, you prefer going to a private hospital as it offers specialised and high-quality services. 
Similarly, parents work day in and day out so that they can afford to enrol their children in private educational institutes. Government schools are never an option for even the middle-class strata of society. The reason behind this preference is the premium amenities and services offered by private schools. 
The same is the case with the PVT LTD company structure. Even though the incorporation and the overall registration process will seem hefty, in the long run, the entrepreneurs get to experience bigger and greater advantages. And that's why even the leading unicorns of our country, like PHARMEASY, OLA, OYO, ZOMATO etc., have opted for the PVT LTD set up over LLP. 

How to Choose Between PVT LTD and LLP? 
The choice can indeed be a difficult and perplexing one. Budding entrepreneurs need to jot down details like budget, business goal, availability of partners, targeted annual turnover etc., to reach a conclusion. Depending on such factors, one can decide whether to go for PVT LTD or LLP company. Another trick is to hire the exemplary services of CompanysRegistration.com.

CompanysRegistration.com Will Help You with the Right Choice!
Over the last seven years, CompanysRegistration.com has helped multiple entrepreneurs to fulfil their Startup dreams. With its expertise and enriching experience, CompanysRegistration.com has registered around 1000 companies. And this, indeed, is a huge milestone accomplished in such a short tenure!

Wondering Why You Should Rely on the Expertise of CompanysRegistration.Com? 
It will help you solve your dilemma. With its apt guidance, you will be able to make up your mind and make a better choice between PVT LTD and LLP setups. Besides the talented and dedicated team members in CompanysRegistration.com  offers to stay updated about the latest changes in the Startup economy. Their specialised and expert services will make the incorporation process seamless and hassle-free. Wait no more and take the leap of faith with an expert beside you!