Registration in India
LLP vs Private Ltd
Here’s a clear comparison between LLP (Limited Liability Partnership) and Private Limited Company in India, especially relevant for startups or small businesses trying to choose the right structure:
⚖️ Legal Structure
Governing Law
LLP Act, 2008
Companies Act, 2013
Legal Identity
Separate legal entity
Separate legal entity
Liability
Limited to agreed contribution
Limited to shareholding
Perpetual Succession
Yes
Yes
👥 Ownership & Management
Minimum Partners/Shareholders
2 Designated Partners
2 Shareholders & 2 Directors
Maximum Partners/Shareholders
No upper limit
200 Shareholders
Foreign Ownership
Allowed (with FDI restrictions)
Allowed (subject to FDI rules)
Management
Partners manage
Directors manage
💰 Capital & Compliance
Minimum Capital
No minimum requirement
No minimum requirement
Capital Contribution Format
Contribution (cash/kind)
Share capital
ROC Compliance
Moderate (Annual filing + Form 8 & 11)
High (Annual return, Board meetings, etc.)
Audit Requirement
Mandatory if turnover > ₹40L or contribution > ₹25L
Mandatory regardless of turnover
📜 Taxation
Corporate Tax
30% (plus surcharge & cess)
22% (under new regime) + surcharge & cess
Dividend Distribution Tax
Not applicable
Dividend taxed in shareholders' hands
MAT (Minimum Alternate Tax)
Not applicable
Applicable
📈 Funding & Scalability
Ease of Raising Funds
Difficult (VCs prefer shares)
Easy (Equity funding, ESOPs possible)
IPO Option
Not allowed
Can convert to Public Ltd and go IPO
✅ Best For
Professionals, consulting firms, bootstrapped ventures
Scalable startups, VC-funded businesses, product-based companies
🚀 Quick Tip:
If you're planning to raise external funding, offer employee stock options, or aim for rapid scaling, a Private Limited Company is usually the better choice.
If you're a small team of co-founders, especially in services or consulting, with limited compliance appetite, LLP is simpler and more cost-effective.
I want to run a startup and raise funds after 6 months. Which one is good for it? LLP or Private Ltd?
For your case — running a startup and planning to raise funds in 6 months — a Private Limited Company (Pvt Ltd) is the better and more strategic choice.
💼 Why Private Ltd is better for a startup aiming to raise funds:
✅ VCs/Angels prefer it
Investors are familiar with the Pvt Ltd structure — it supports equity ownership, share transferability, and clear cap tables.
✅ ESOPs are easier
If you want to attract talent and give equity in the future, Employee Stock Option Plans (ESOPs) are only possible under Pvt Ltd (not LLP).
✅ Scalability
Pvt Ltd is built to scale: you can add investors, raise multiple rounds, and even convert to a public company later for IPOs.
✅ Compliance signals seriousness
Pvt Ltds are held to a higher standard of corporate governance, which increases investor trust.
❌ Why LLP is not suitable for fundraising:
LLPs don’t have share capital — ownership is by partnership and contribution.
You cannot issue equity shares, so VCs/Angels can’t invest in traditional ways.
Converting an LLP to a Pvt Ltd later is legally possible, but it’s tedious, time-consuming, and can raise investor red flags.
🔍 TL;DR
Fundraising Friendly
❌
✅
Can Issue Shares/ESOP
❌
✅
Investor Preference
Low
High
Long-term Growth & IPO Path
❌
✅
Go with Pvt Ltd. It’s a little heavier on compliance and cost upfront — but absolutely worth it when you want to scale and raise capital.
Want help drafting a cap table or basic incorporation docs?
Can I convert LLP to PLTD later?
Yes, you can convert an LLP to a Private Limited Company (Pvt Ltd) in India — but it’s not as simple or smooth as you might hope.
Let’s break it down:
✅ Is it Legally Possible?
Yes, under Section 366 of the Companies Act, 2013, an LLP can be converted into a Private Limited Company — subject to conditions.
🛠️ Conditions for Conversion
Minimum 2 Shareholders and 2 Directors
At least one director must be an Indian resident.
LLP must have at least 2 Partners
Which will become shareholders in the new Pvt Ltd.
No Secured Loans
LLP must have no secured debts or loans at the time of conversion.
Consent of All Partners
Every partner in the LLP must agree to the conversion.
Latest Financial Statements
You need updated filings and a clean compliance history.
🧾 Key Documents Needed
Form URC-1 (for companies formed from LLPs)
NOC from ROC (for the LLP name)
LLP agreement and Certificate of Incorporation
Audited financial statements
Affidavits, declarations, consent letters
⚠️ Challenges You Might Face
Legal complexity: Involves both MCA and ROC processes
Valuation headaches: For capital structure, shareholding, and compliance
Tax implications: May trigger capital gains tax or other liabilities
Investor risk: Some investors may hesitate with converted entities
Time & Cost: Takes 4–8 weeks (or more) and requires CS/legal help
✨ Pro Tip
If you know you'll raise funds in 6–12 months, it's better to register as a Pvt Ltd right now rather than convert later.
Starting with LLP → Converting to Pvt Ltd = More work, delays, cost, and compliance headaches.
I heard Pvt ltd is too much for a small company
Totally fair — that’s a common (and valid) concern, especially when you're just getting started. Let’s unpack that 👇
😰 Why People Say Pvt Ltd is "too much" for small companies
Too much compliance
Yes, it has more paperwork than LLP (board meetings, ROC filings, etc.), but most of it can be automated or outsourced for ₹10k–₹20k/year.
Costly to maintain
Annual compliance + audit may cost ₹15k–₹40k, depending on your CA. LLP is cheaper — but not by that much.
Hard to manage solo
If you're a solo founder, you need a co-director. But they don't have to be involved daily (can even be a family member temporarily).
Too early to think about shares
Maybe true for a hobby business — but if you’re building a scalable startup, it’s better to set up right.
📈 But here’s the thing…
If your goal is:
✅ Raising funds ✅ Giving equity to co-founders/advisors ✅ Building something scalable or tech-based ✅ Growing fast and hiring people
… then Private Ltd is worth the upfront structure.
🛡️ Consider this compromise:
If you're bootstrapping for 6–12 months:
Start as Pvt Ltd with basic compliance. Use a minimal plan from a CA/CS service like IndiaFilings, VakilSearch, LegalWiz, or your local CS.
No need for fancy ESOPs or investors from day 1. Just get the framework in place so when funding talks start, you’re already ready.
🔁 Vs starting as LLP and converting later?
Cheaper short term
Investor-ready from day 1
Fewer filings
Easier for equity, valuation, ESOPs
Conversion later is complex
No future restructuring needed
✅ TL;DR
Yes — Pvt Ltd is more structured than LLP. But for a fundraising-focused startup, that structure is an asset, not a burden.
Let me know your startup stage — I can suggest the leanest Pvt Ltd setup for you.
My monthly sales would be only 1L
Got it — if your monthly sales are only ₹1L (₹12L/year), you're in the early traction or validation stage, and it's smart to weigh cost vs. future plans.
Let’s keep it real:
🔍 Given your sales:
You’ll probably incur losses or low profits in the first year.
You’re likely bootstrapping for now, maybe investing your own funds.
You want to raise in 6 months, so you're setting up a fundable structure.
💸 Cost Comparison (Realistic Annual Estimate)
Expense Type
LLP
Private Ltd
ROC Compliance
₹3k–₹5k
₹7k–₹10k
Audit + Annual Filing
₹7k–₹10k (if req)
₹12k–₹20k (mandatory)
Accounting/Bookkeeping
₹5k–₹10k
₹10k–₹15k
Total
₹15k–₹25k
₹25k–₹45k
So yes — Pvt Ltd will cost ~₹10k–₹20k more/year than LLP. But that’s the price of investor readiness.
🧠 Strategy You Can Use:
💡 Register as a Private Limited Company now with:
Minimum authorized capital (₹1 lakh — no need to deposit it right away)
Basic setup (no fancy MOA/AOA customizations)
Keep your co-founder or trusted person as 2nd director
Use low-cost platforms like LegalWiz, IndiaFilings, or local CA
This keeps your costs low but your structure future-proof.
🚀 Bonus: Raising Funding
When you go to raise:
Investors will want a cap table, shares issued, proper structure — Pvt Ltd will already have that.
You won’t need to restructure, convert, or delay funding because “we’re still an LLP.”
🧾 TL;DR
With ₹1L/month sales:
LLP is cheaper short term
But Pvt Ltd is an investment in future funding — worth the extra ₹15k/year
Keep Pvt Ltd lean until money starts flowing
If you want, I can help you with:
A lean incorporation checklist
Drafting an initial cap table
Connecting to budget-friendly CA/CS
Let me know!
I need lean incorporation checklist
Perfect! Here's your Lean Private Limited Company Incorporation Checklist — tailored for a startup with ₹1L/month revenue, aiming to raise funds in 6–12 months.
✅ 1. Basic Requirements
Directors
Minimum 2 (1 must be Indian resident)
Shareholders
Minimum 2 (can be same as directors)
Capital
Minimum ₹1 lakh (authorized) – no need to deposit immediately
Registered Office
Required (can be residential address with NOC)
Unique Name (Company Name)
Must be approved by MCA; use MCA Name Check Tool
📄 2. Documents Needed
PAN Card (mandatory for Indians)
Aadhaar or Passport (ID proof)
Address Proof (Bank Statement, Utility Bill, etc.)
Not older than 2 months
Passport-sized Photo
JPG or PNG
Email ID + Mobile Number
For OTPs and MCA login
Registered Office Proof
Rent agreement / NOC / EB bill in owner's name
🏗️ 3. Key Steps to Incorporate
Step 1
Apply for Digital Signature (DSC) for all directors
Step 2
Apply for Director Identification Number (DIN)
Step 3
Reserve Company Name (via SPICe+ Part A)
Step 4
Fill SPICe+ Part B, AGILE-PRO, e-MOA, e-AOA
Step 5
Upload documents, verify, and submit to MCA
Step 6
MCA issues Certificate of Incorporation (COI) + PAN + TAN
You’ll also get:
Company PAN/TAN automatically
GST (optional at this stage)
EPFO, ESIC, and bank account application (via AGILE-PRO)
💼 4. Post-Incorporation Essentials
Open company bank account
High
Appoint a CA/CS for annual compliance
Medium
Draft founders agreement (equity split, roles, IP rights)
High
Setup basic bookkeeping (Zoho Books, QuickBooks, or Excel)
High
Apply for Startup India DPIIT Recognition (optional but useful for investors & tax benefits)
Optional but valuable
💰 Estimated Cost (Lean Setup)
DSC & DIN (2 people)
₹1,500 – ₹3,000
Name approval
₹1,000 (included in SPICe+)
Filing & Documentation
₹5,000 – ₹10,000 (via platforms or CA)
Professional Fee
₹5,000 – ₹15,000
Total
₹10,000 – ₹25,000 (one-time)
🛠️ Tools You Can Use
Incorporation, low-cost CS
End-to-end setup
Accounting, GST-ready
DPIIT recognition & benefits
Here you go! Here's a Notion-ready Lean Pvt Ltd Incorporation Checklist you can copy-paste directly into a Notion page and start using today:
✅ Lean Pvt Ltd Incorporation Checklist (India)
📌 1. Basic Requirements
📄 2. Documents Required (for each director/shareholder)
⚙️ 3. Incorporation Steps
📋 4. Post-Incorporation To-Do
💰 Estimated Cost
DSC & DIN
₹1,500 – ₹3,000
Name Approval & Filing
₹5,000 – ₹10,000
Professional Fee
₹5,000 – ₹15,000
Total
₹10,000 – ₹25,000 one-time
🛠️ Helpful Tools
We are a small team of co-founders, especially in services or consulting, with limited compliance appetite, LLP is simpler and more cost-effective.
Can we go with LLP?
Yes — absolutely, you can go with LLP if you're:
✅ A small team of co-founders ✅ Offering services or consulting ✅ Not planning to raise external funding immediately ✅ Want to keep compliance low and focus on delivery
💼 LLP is great for:
Agencies, studios, or boutique firms (e.g., design, dev, marketing, legal, consulting)
Founders who are focused on profitability over hyper-growth
Those who want a legal shield (limited liability) without Pvt Ltd's structure
✅ LLP Benefits for You
Limited Liability
Protects your personal assets
No audit till ₹40L turnover / ₹25L capital
Saves cost early on
Fewer ROC filings
Less paperwork, fewer deadlines
Cheaper to maintain
Annual cost can be ₹10k–₹15k/year
Taxation at flat 30%
Simple tax structure
❗ But Remember:
Raising VC/Angel funding = Not ideal in LLP
No shares, no equity = No cap table = VCs won’t invest directly
No ESOPs = Can’t easily reward early team members with equity
Conversion to Pvt Ltd later is legally possible but complex + time-consuming
🧭 So here’s the decision logic:
Small, service-based firm
✅ Yes
No funding in the next 12 months
✅ Yes
Bootstrapped, want to stay lean
✅ Yes
Planning to raise VC funding soon
❌ Not ideal
Need equity shares / ESOPs
❌ Not possible
🎯 TL;DR
Yes, LLP is perfect for small service/consulting firms with co-founders and low compliance appetite. Just be sure you’re okay not raising VC money or issuing equity in the near future.
If your plan is to stay lean, build cash flow, and maybe fundraise much later, then start with LLP — you can convert later if absolutely needed.
LLP Checklist
Awesome! Here’s your Lean LLP Incorporation Checklist (India) — perfect for small co-founder teams in services/consulting who want a low-cost, low-compliance legal entity.
✅ Lean LLP Incorporation Checklist (India)
📌 1. Basic Requirements
📄 2. Documents Required (for each partner)
PAN Card
Mandatory for Indian citizens
Aadhaar / Passport
As identity proof
Address Proof
Recent utility bill or bank statement
Passport-size Photo
JPG or PNG
Email ID + Mobile Number
For MCA communication
Registered Office Proof
Rent agreement + NOC OR utility bill
⚙️ 3. LLP Incorporation Steps
Step 1
Apply for Digital Signature (DSC) for both partners
Step 2
Apply for DPIN (Designated Partner ID)
Step 3
Reserve LLP Name via RUN-LLP form
Step 4
Fill and file FiLLiP form for incorporation
Step 5
Draft and file LLP Agreement (within 30 days of incorporation)
Step 6
Receive Certificate of Incorporation + LLPIN
📋 4. Post-Incorporation To-Do
💰 Estimated Cost (One-Time)
DSC (2 partners)
₹1,000 – ₹2,000
Name Reservation (RUN)
₹200
Filing (FiLLiP + LLP Agreement)
₹1,000 – ₹2,000
Professional Fee (optional CA)
₹5,000 – ₹10,000
Total
₹7,000 – ₹15,000 (one-time)
🧾 Annual Maintenance Cost
Filing Form 11 & 8
₹3,000 – ₹6,000
Bookkeeping / Accounting
₹5,000 – ₹10,000
Total
₹8,000 – ₹15,000/year
🛠️ Useful Tools & Services
MCA Portal – official filings
LegalWiz LLP Service – easy LLP registration
Zoho Books – bookkeeping
IndiaFilings – compliance support
Yes, you can absolutely register your IT company as an LLP — and it’s actually a very common choice for early-stage tech or service-based IT businesses in India. Here's how it breaks down:
✅ LLP is a good fit for your IT company if:
You're offering IT services or consulting (web dev, mobile apps, SaaS dev, tech support, etc.)
✅ Perfect
You have 2+ co-founders and want to share profits/responsibilities
✅ Ideal
You're not planning to raise VC/angel funding immediately
✅ Makes sense
You're focused on profitability and lean operations
✅ Yes
You're fine with not offering equity (ESOPs) to employees for now
✅ Works
❌ LLP is not suitable if:
You want to raise external investment (VC/angels) in 6–12 months
🚫 Not ideal
You need to issue equity shares or ESOPs
🚫 Not allowed in LLP
You're building a product company aiming to scale rapidly
🚫 Pvt Ltd better long-term
🧠 Examples of LLP IT Companies
Freelance web/mobile/app development firms
Software consulting & IT staffing services
IT support & infra management teams
Outsourcing partners for tech projects
Agencies providing AI, ML, or cloud solutions (on service model)
✨ Pro Tip
If you're starting an IT services company with co-founders, limited capital, and no immediate funding needs — LLP is a cost-effective, low-compliance way to get started.
You can always convert to Pvt Ltd later, when you're ready to raise capital or issue equity.
National Industrial Classification
Perfect! Here are the recommended NIC (National Industrial Classification) codes for your IT LLP — useful during LLP incorporation (FiLLiP form), and especially important for GST registration, Startup India DPIIT registration, and banking purposes.
🧠 Top NIC Codes for IT Services LLP (You can pick one or multiple):
62011
Writing, modifying, testing of computer program to meet the needs of a particular client (Custom software development)
62012
Web-page designing and computer programming activities for online use
62013
Providing software support and maintenance services
62020
IT consultancy services (advisory on hardware/software/networking/cloud etc.)
62090
Other information technology and computer service activities (e.g., AI, ML, blockchain services)
63119
Other data processing, hosting, and related activities (cloud hosting, platform support)
📌 Recommendation for Your LLP:
✅ 62011 and 62012 — if you're focused on software/app/web development
✅ 62020 — if you're also doing consulting or advisory work
✅ 62090 — if you're into AI/ML, data science, or emerging tech services
🧾 Where to Use These NIC Codes:
LLP incorporation (SPICe/FiLLiP forms)
GST registration
Startup India / DPIIT application
MSME Udyam Registration
Company bank account setup
LLP Agreement template
Awesome! Here’s a lean, founder-friendly LLP Agreement template tailored for an IT services company, including:
Business activities (with NIC codes)
Roles and responsibilities
Profit-sharing
Capital contribution
Exit & dissolution basics
You can copy this into a Word/Google Doc or Notion for editing, or I can export it as a .docx or .pdf — just let me know!
📄 Sample LLP Agreement (Lean IT Services Version)
LIMITED LIABILITY PARTNERSHIP AGREEMENT This Agreement is made on this ___ day of _______ 2025 by and between the following Partners:
[Partner 1 Name], residing at [Address]
[Partner 2 Name], residing at [Address]
Hereinafter collectively referred to as “Partners” and individually as “Partner”.
The Partners hereby form a Limited Liability Partnership under the name [Your LLP Name] LLP, pursuant to the LLP Act, 2008 and agree as follows:
1. Name, Registered Office, and Business
The LLP shall be known as [Your LLP Name] LLP.
Registered Office: [Full address]
Business Activities:
To provide IT and software-related services including (but not limited to) custom software development, mobile and web application development, cloud and infrastructure consulting, data analytics, AI/ML development, cybersecurity, and other information technology-enabled services in India and abroad.
NIC Codes:
62011 – Custom software development
62012 – Web design and programming
62020 – IT consultancy
62090 – Other IT and computer service activities
2. Capital Contribution
Total capital: ₹1,00,000
3. Profit Sharing Ratio
Profits and losses of the LLP shall be shared in the following ratio:
(You can adjust based on roles/effort/capital)
4. Designated Partners
The following partners shall act as Designated Partners under the LLP Act:
5. Duties & Responsibilities
Each partner shall actively contribute to the operations of the LLP.
Partner 1: Handles client acquisition and product architecture.
Partner 2: Leads project delivery, dev team, and client relations.
6. Bank Account
A bank account shall be opened in the name of the LLP, and all revenues and expenses shall flow through it.
Signing authority: [Specify both or either partner]
7. Admission/Retirement of Partners
Any new partner may be admitted with consent of all existing partners.
A retiring partner must give 30 days’ notice in writing.
8. Dissolution
The LLP may be dissolved with mutual consent of all partners, or due to insolvency, illegality, or inability to carry on business.
9. Dispute Resolution
Any disputes shall be resolved amicably. If unresolved, it shall be referred to arbitration under the Arbitration and Conciliation Act, 1996.
10. Miscellaneous
All statutory filings, including Form 8, Form 11, and tax returns, shall be done by the LLP annually.
This Agreement may be modified with written consent of all partners.
IN WITNESS WHEREOF, the partners have signed this Agreement on the day, month, and year first above written.
Partner 1
Partner 2
Would you like this exported as a .docx or .pdf file? Or want me to include additional clauses like IP ownership, non-compete, or withdrawal of profits?
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