Business setup · Harshit Dudeja & Co.

Both structures give you limited liability and a separate legal identity. The difference is in funding, compliance and tax.

Private Limited Company

  • Needs at least two directors and two shareholders, and can have up to 200 shareholders.
  • Can issue shares, so it suits businesses that want investors or employee stock options.
  • A statutory audit and annual ROC filings are compulsory every year, whatever the turnover.
  • Can opt for concessional company tax rates (22% or 25%, subject to conditions). Dividends are then taxed again in the shareholder's hands.

Limited Liability Partnership (LLP)

  • Needs at least two partners, with no minimum capital contribution.
  • Lighter compliance and lower running cost, which suits professionals and small family businesses.
  • Audit is required only if turnover is above ₹40 lakh or the contribution is above ₹25 lakh.
  • Taxed at a flat 30% (plus surcharge and cess), and cannot issue shares, so equity funding is harder.

Which one to pick

Choose a Private Limited Company if you expect investors, ESOPs or fast scaling. Choose an LLP if you want simpler compliance and no outside equity. Tax and compliance costs depend on your numbers, so please talk to us before deciding.

Last verified: October 2026. Thresholds and rates can change, so please confirm before you act.

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