Private Limited or LLP: which should you choose?

The question is usually framed as which is better. It is not that kind of decision — it is a trade-off between how much compliance you are willing to carry and whether you will ever raise equity.

If you will raise investment, choose a private limited company. An LLP cannot issue shares. Every investor from an angel upward will ask you to convert first, and converting later costs materially more than incorporating correctly at the start.

If you are a professional or services firm funding itself from revenue, an LLP is usually cheaper to run. Two annual filings instead of a company's full suite, and no statutory audit below turnover of Rs 40 lakh or contribution of Rs 25 lakh.

The mistake we see most often is incorporating a private limited company for a two-person consultancy that will never raise money, then paying for annual compliance that buys nothing.