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Choosing a structure
Partnership vs LLP vs Private Limited: which should you choose?
A side-by-side look at liability, compliance, funding and cost, so you can pick the right structure before you register.
Liability
- Partnership: partners are personally liable without limit
- LLP: liability limited to agreed contribution
- Private Limited: liability limited to unpaid share capital
Compliance effort
- Partnership: lowest; registration with the state registrar is optional but advisable
- LLP: two MCA forms a year, audit only above set limits
- Private Limited: audit every year, AGM, board meetings and several MCA forms
Funding and ownership
- Partnership: hard to bring in investors or transfer ownership
- LLP: possible, but most investors avoid it
- Private Limited: the standard choice for equity funding and ESOPs
Rule of thumb
Family or small local trade: partnership or proprietorship. Professional practice or services with a few partners: LLP. Raising money or scaling nationally: Private Limited.
Common questions
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