What is the Difference between LLP and LLC License?

Since the concept of Limited Liability Partnership has been introduced in India, apart from commencing a traditional Limited Liability Company (LLC), it has become an alternative for business owners, investors and entrepreneurs commencing new ventures to start their business as a Limited Liability Partnership. In regard of this, it is essential to understand the pros of each of these business forms, the differences between LLC and LLP License them and think carefully which business formis best suitedfor the business.

Feature Comparison between LLP and LLC License

In order to help you in making a decision on which business form to choose, here’s a comparison of feature between the LLP and a LLC License:

Features	LLC License	LLP
Registration	Obligatory registration required with the Registrar of Companies. Certificate of Incorporation is irrefutable evidence.	Obligatory registration required with the Registrar of Companies.
Name	Name of a private company to end with the word “private limited” and a public company with the words “limited”.	Name to end with “LLP”” which is abbreviation for Limited Liability Partnership”
Capital contribution	A private limited company should have a minimum paid up capital of INR. 1 lakh and for a public limited company the requirement of minimum paid up capital is INR.5 lakhs.	Not specified.
Legal entity status	LLC is a separate legal entity.	LLP is a separate legal entity.
Liability of shareholders/ LLP partners	Limited to the scope of the unpaid capital.	Limited to the scope of the involvement to the LLP.
No. of shareholders / Partners	Minimum of 2 shareholders In a private company and maximum of 50.	Minimum of 2 shareholders and No maximum.
Foreign Nationals as shareholder / Partner	Foreign nationals can be shareholders/partners.	Foreign nationals can be partners.
Taxability	The income of domestic companies is taxed at 30% + surcharge+cess.	Income tax is imposed at the rate of 30%+ surcharge+cess.
Meetings	Quarterly Board of Directors meeting, annual shareholding meeting is obligatory.	Meetings are not required.
Annual Return	Annual Return and Annual Accounts to be filed with ROC.	Solvency & Annual Return and Annual statement of accounts has to be filed with ROC.
Audit	Obligatory, irrespective of turnover and share capital.	If the contribution is above INR 25 lakhs or if annual turnover is more than INR 40 lakhs then the audit is required.
Foreign Investment	Foreign investment approved on automatic or approval basis on a range of sectors in accordance with Foreign Direct Investment (FDI) policy. There are percentage limitations, and performance linked state of affairs, such as minimum capitalization in various sectors.	Foreign investment in LLPs has been authorized on May 11, 2011, but it is constrained to only those sector where 100% FDI for companies is permitted, and which do not have any performance linked state of affairs. All foreign investment in Limited Liability Partnership on approval basis.

Process of formation of LLP and LLC License

Incorporation of LLP	Incorporation of LLC
For formation of a Limited Liability Partnership, minimum 2 Partners are requisite. There is no prescribed limit for maximum number of Partners. In an LLP a body corporate can also be a member.	The minimum number of shareholder compulsory for a company is 2 and the maximum limit for shareholders is 50, in case of a Pvt. Ltd. company.
Steps for Incorporation of LLP	Steps for Incorporation of LLC
For the formation of Limited Liability Partnership, firstly applicant is required to apply for Designated Partner Identification Number for the designated partners of LLP and acquire Digital Signature Certificate for at least one of the Partners.	The first step for incorporation of a LLC is selection of name for the company. Then apply for Digital Signature Certificate and Directors Identification Number.
Application for Availability of Name & acquiringtheName for the anticipated LLP.	Drafting of Memorandum of Association (MoA) and Articles of Association (AoA).
Drafting of Limited Liability Partnership Agreement and filing of document of incorporation consisting of Form 2, 3 and 4 available on official web site (llp.gov.in) with the registrar of companies.	Digital signing, Stamping and e-filing of- AoA, MoA, E-Form 1, 32 and 18under Companies Act, 2013, and other documents if required will be submitted with the Registrar of Companies.
Obtaining Registration Certificate of Limited Liability Partnership.	Obtaining Incorporation Certificate of Limited Liability Company.

Both LLP and LLC protect the members/ partners from the legal trouble stemming from the activities of LLC License or LLP.

Conclusion

Both LLP and LLC are registered under Registrar of Companies and both the enterprises protect the partners or members from the legal risk restricting from the activities of LLP or LLC License. The main difference that a business must comprehend and take into description is the difference in its taxation and compliance obligation.