A Partnership is a legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners. A partnership, as distinguished from a corporation, is not a separate entity from the individual owners. The partnership income tax is paid by the partnership, but the profits and losses are divided among the partners, based on their agreement. Partnerships are usually registered with the state in which they do business, but the requirement to register varies from state to state.
There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages.
Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008. The basic idea behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to maintain while at the same time providing limited liability to the owners. A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or liable for another partner's misconduct or negligence. Therefore, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents. LLP is one of the easiest form of business to incorporate and manage.
Private limited company is the most popular form of business entity. To incorporate a private limited company minimum number of two shareholders and two directors are required maximum upto 200 shareholders and 50 directors are allowed. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity.
The term Public Limited Company has been defined Under Section 2(71) of companies Act, 2013. As per this Act public Company means a company which is not a private company and which has minimum paid up capital of Rs.500000 or such higher paid up capital, as may be prescribed. . In India, these companies must have a minimum no of 3 directors and 7 shareholders. A maximum of 50 directors are allowed and there is no restrictions on the maximum number of shareholders. Public Limited companies are those whose securities are traded on a stock exchange and can be bought and sold by anyone.