LLP vs Private Limited Company: Which is Better for Startups in Delhi NCR?
When launching a startup in Delhi NCR, one of the most crucial early decisions is choosing the right legal structure. Two of the most popular options—Limited Liability Partnership (LLP) and Private Limited Company (Pvt Ltd)—both offer liability protection and flexibility, but they differ significantly in terms of compliance, fundraising ability, and scalability.
In this guide, we break down both options across key factors to help you decide which structure suits your startup journey in Delhi NCR.
What is an LLP?
A Limited Liability Partnership is a hybrid structure that combines the features of a partnership and a company. It is registered under the LLP Act, 2008 and offers limited liability to its partners. LLPs are ideal for small-scale service businesses and professional firms like consultancies, CA firms, and legal practices.
Key Features:
No minimum capital required
At least two partners needed
One designated partner must be an Indian resident
Easy compliance compared to Pvt Ltd
What is a Private Limited Company?
A Private Limited Company is a separate legal entity registered under the Companies Act, 2013. It is the most favored structure for startups that plan to raise venture capital, issue shares, or eventually go public.
Key Features:
Requires a minimum of two shareholders and directors
Limited liability for all members
Can issue shares to investors
Higher credibility with banks, investors, and customers
Feature | LLP | Private Limited Company |
|---|---|---|
| Governing Law | LLP Act, 2008 | Companies Act, 2013 |
| Minimum Members | 2 Partners | 2 Shareholders & 2 Directors |
| Separate Legal Entity | Yes | Yes |
| Limited Liability | Yes | Yes |
| Fundraising from Investors | Not allowed | Allowed (VCs, angel investors, etc.) |
| Taxation | 30% + cess (Flat rate) | 25% for turnover < ₹400 Cr |
| Annual Compliance Cost | Low (~₹5K–₹10K) | High (~₹15K–₹30K) |
| Statutory Audit Requirement | Only if turnover > ₹40 lakh | Mandatory regardless of turnover |
| Ease of Conversion | Complex | Easier to scale or convert to public |
Real-World Scenarios: What Delhi Startups Choose
Let’s consider two startup journeys in Delhi NCR to understand this choice better: 🔹 Case 1: Renu & Co – A Marketing Consultancy (LLP) Renu and her co-founder start a boutique digital marketing agency in South Delhi. They don’t plan to raise funding and just want a clean, professional structure for billing clients and limiting personal liability. They choose an LLP because: It has lower setup and compliance costs They don't need equity investors They want to focus on operations, not paperwork 🔹 Case 2: TechSpark Pvt Ltd – A SaaS Startup (Private Limited) An IIT Delhi duo builds a tech product with the intention of pitching to angel investors and incubators like T-Hub and Y Combinator. They register as a Private Limited Company because: They need to issue shares to investors A formal board structure improves credibility Startup India benefits (tax exemption, DPIIT recognition) apply more easily to Pvt Ltd entities
A Few Of Our Clients
