– It is less economical as compare to sole proprietorship but have others benfits as compare to LLP & Private Limited Company. East to start with low capital requirement.

Partnership Firm is the most popular business form that consist the management and control of two or more individuals who carry business activities as per the terms and objectives defined in Partnership Deed. Its low investment, ease of setting-up, and minimal compliance requirements make it a good option for aspiring entrepreneurs that are unlikely to opt for any debt. Moreover, registration is optional for operating a Partnership Firm in India, however, it is sensible to register a Partnership venture to enjoy certain additional privileges.

Recently introduced business form in India, Limited Liability Partnership (LLP), however, has started impacting the Partnership model as LLP provides unlimited liability to the partners, which means they are personally liable for all the business-related debts.

A partnership firm is a business structure in which two or more individuals manage and operate a business as per the terms and objectives set out in a Partnership Deed that may or may not be registered. In such a business, all members are individually the partners and share the liabilities as well as profits of the firm in a predetermined ratio.

– Private limited company is the most adopted corporate entity structure, primarily by small and medium businesses, and it’s even popular among large corporate-houses.

-A Pvt. Ltd. Co. is essentially a limited liability entity which is governed by the MCA, Companies Act of 2013, and the Companies Incorporation Rules of 2014 for the registration purposes.

These are some benefits of Private Limited Company:

Distinct Entity

Pvt. Ltd. Co. is an independent corporate and legal entity established under the Company’s Act, therefore, it enjoys a range of legal capacities, including bank account opening, employees hiring, and taking on equity or obtaining licenses. Also, company’s shareholders and directors have no personal liability for its debts.

Property Ownership

Being an artificial person, a Pvt. Ltd. Co. can acquire, own, enjoy, and alienate property (including machinery, building, land, factory, and others) in its name. Also, the members (shareholders / directors) cannot claim any ownership of the company as long as the company enjoys the on-going concern status

Limited Liability

Member’s liability in Pvt. Ltd. Co. is limited to the extent of their investment contributions to the business. Moreover, member’s personal assets are protected from any liability of Pvt. Ltd. Co.

Easy to Transfer

Since Pvt. Ltd. Co. holds a separate identity from that of its members, therefore, the ownership can easily be transferred, just by transferring shares with the consent of other shareholders.

Perpetual Succession

Until a Pvt. Ltd. Co. is legally dissolved, it can enjoy the benefits of an on-going concern, irrespective of the demise or exit of any member (shareholders / directors) and any ownership change

Financing Ease

Banking and Financial Institutions prefer to finance a Pvt. Ltd. Co., and it can raise equity funds, issue equity shares, preference shares, debentures, and can even accept deposits with RBI’s permission.