Difference between a Limited Liability Partnership (LLP) and a Private Limited Company (PLC)

The most common question faced by entrepreneurs planning to register their businesses as a separate legal entity is whether to incorporate a Private Limited Company or a Limited Liability partnership. There are advantages and disadvantages of both and the decision to choose the legal structure requires careful consideration according to the founding team’s vision. Inrole experts have broken it down in simple terms what each of these really mean.

‍Differences between LLP and PLC

Similarities between LLP and PLC

TL;DR

In essence, Limited Liability Partnership and Private Limited Company are governed by different statutes. Under their respective statues, Liability and Ownership sets the two entities clearly apart. While a PLC comes with additional statutory compliances, If you seek to raise VC/PE/foreign funding or wish to exercise ESOPs, a PLC is the most ideal business structure to register your business. However, if your business will be a closely owned business which does not need external funding, an LLP is most ideal since it is required to undertake lesser compliances and offers more operational flexibility in structuring the LLP compared to a PLC, which is bound by its Memorandum of Association (MOA) and Articles of Association (AOA).

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