Proprietorship vs Partnership vs LLP vs Company vs One Person Company

Partnership vs LLP vs Private Limited Company

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Proprietorship vs Partnership vs LLP vs Private Limited Company vs OPC

Selection of business entity is among the first legal decision taken by an Entrepreneur while starting a new business. With the introduction of the Limited Liability Partnership Act and the Companies Act, 2013, more choices of business entities are now available. Therefore, it is important for the Entrepreneur or Promoter to understand the pros and cons of each of the business entity and choose the right one. Among the choice of For-Profit entities available like Proprietorship, Partnership, Limited Liability Partnership, One Person Company, Private Limited Company and Limited Company, a few are ideal for most Entrepreneurs. In this article, we compare those types of entities viz. Proprietorship vs Partnership vs LLP vs Private Limited Company vs One Person Company.


Registration


Proprietorship

There is no formal registration for Proprietorship.

Partnership

Partnership can be registered or unregistered. Registration of Partnership is optional. If registered, Partnership is registered under the Partnership Act, 1932.

LLP

LLP will be registered with the Ministry of Corporate Affairs under the Limited Liability Partnership Act, 2008.

Private Limited Company

Private Limited Company will be registered with the Ministry of Corporate Affairs under the Companies Act, 2013.

One Person Company

One Person Company will be registered with the Ministry of Corporate Affairs under the Companies Act, 2013.


 Name of the Entity


Proprietorship

The Promoter’s choice of name can be used for the Proprietorship. No approval is necessary for using name; however, it is good to avoid trademarked names.

Partnership

The Promoters choice of name can be used for the Partnership. No approval is necessary for using name; however, it is good to avoid trademarked names.

LLP

The choice of name provided by the Promoter must be approved by the Registrar of Company. Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed. The name of the entity will end with the words “Limited Liability Partnership” or “LLP”.

Private Limited Company

The choice of name provided by the Promoter must be approved by the Registrar of Company. Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed. The name of the entity will end with the words “Private Limited Company”.

One Person Company

The choice of name provided by the Promoter must be approved by the Registrar of Company. Only names that are not identical / similar to an existing company or LLP name and names that are not offensive or illegal would be allowed. The name of the entity will end with the words “OPC” or “One Person Company”.


Legal Status of Entity


Proprietorship

Proprietorship is not recognised as a separate legal entity and the promoter is personally liable for the liabilities of the Proprietorship.

Partnership

Partnership is not recognised as a separate legal entity and the promoters are personally liable for the liabilities of the partnership.

LLP

LLP is a separate legal entity registered under the LLP Act, 2008. The partners of a LLP are not personally liable for the liabilities of the LLP.

Private Limited Company

Private Limited Company is a separate legal entity registered under the Companies Act, 2013. The Directors and Shareholders of a Private Limited Company are not personally liable for the liabilities of the Company.

One Person Company

One Person Company is a separate legal entity registered under the Companies Act, 2013. The Director and Nominee Director of a One Person Company are not personally liable for the liabilities of the Company.


Member(s) Liability


Proprietorship

Proprietor has unlimited liability and is responsible for all the liabilities of the Proprietorship.

Partnership

Partners have unlimited liability and is responsible for all the liabilities of the Partnership.

LLP

Partners have limited liability and is liable only to the extent of their contribution to the LLP.

Private Limited Company

Shareholders have limited liability and is liable only to the extent of their share capital.

One Person Company

Director and Nominee Director have limited liability and is liable only to the extent of his/her share capital.


Minimum Number of Members


Proprietorship

Can have only one person as member.

Partnership

A minimum of two persons are required to start a Partnership.

LLP

A minimum of two persons are required to start a LLP.

Private Limited Company

A minimum of two persons are required to start a Private Limited Company.

One Person Company

A minimum of two persons are required to start a One Person Company, viz. Director and Nominee Director.


Maximum Number of Members


Proprietorship

Can have only one person as member.

Partnership

The maximum number of partners can be only 20.

LLP

A LLP can have unlimited number of Partners.

Private Limited Company

A Private Limited Company can only have a maximum of 200 shareholders or members.

One Person Company

A One Person Company can have only two people, viz. Director and Nominee Director.


Foreign Ownership


Proprietorship

Foreigners are not allowed to start a Proprietorship.

Partnership

Foreigners are not allowed to start a Partnership.

LLP

Foreigners are allowed to invest in a LLP only with prior approval of Reserve Bank of India and Foreign Investment Promotion Board (FIPB) approval.

Private Limited Company

Foreigners are allowed to invest in a Private Limited Company under the Automatic Approval route in most sectors.

One Person Company

Director and Nominee Director cannot be Foreigners.


Transferability


Proprietorship

Not transferable.

Partnership

Not transferable.

LLP

Ownership can be transferred.

Private Limited Company

Ownership can be transferred by way of share transfer.

One Person Company

Ownership can be transferred.


Existence or Survivability


Proprietorship

Existence of a Proprietorship business is dependent on the Proprietor.

Partnership

Existence of a Partnership business is dependent on the Partners. Could be up for dissolution due to death of a Partner.

LLP

Existence of a LLP is not dependent on the Partners. Could be dissolved only voluntarily or by an Order of the Company Law Board.

Private Limited Company

Existence of a Private Limited Company is not dependent on the Directors or Shareholders. Could be dissolved only voluntarily or by Regulatory Authorities.

One Person Company

Existence of a One Person Company is not dependent on the Director or Nominee Director. Could be dissolved only voluntarily or by Regulatory Authorities.


Taxation


Proprietorship

Taxed as individual, based on the total income of the Proprietor.

Partnership

Partnership profits are taxed at 30% plus surcharge and cess as applicable.

LLP

LLP profits are taxed at 30% plus surcharge and cess as applicable.

Private Limited Company

Private Limited Company  profits are taxed at 30% plus surcharge and cess as applicable.

One Person Company

One Person Company profits are taxed at 30% plus surcharge and cess as applicable.


Annual Statutory Meetings


Proprietorship

No requirements to conduct annual statutory meetings.

Partnership

No requirements to conduct annual statutory meetings.

LLP

No requirements to conduct annual statutory meetings.

Private Limited Company

Board and General Meetings must be conducted periodically.

One Person Company

No requirements to conduct annual statutory meetings.


Annual Filings


Proprietorship

No requirements to file annual report with Registrar of Companies. Income Tax Return must be filed based on the income of the Proprietorship.

Partnership

No requirements to file annual report with Registrar of Companies. Income Tax Return must be filed for the Partnership.

LLP

LLP must file Annual Statement of Accounts & Solvency and Annual Return with the Registrar each year. Income Tax Return must also be filed for the LLP.

Private Limited Company

Private Limited Company must file Annual Accounts and Annual Return with the Registrar of Companies each year. Income Tax Return must also be filed for the Private Limited Company.

One Person Company

One Person Company must file Annual Accounts and Annual Return with the Registrar of Companies each year. Income Tax Return must also be filed for the One Person Company.


Registration Cost


Proprietorship

IndiaFilings offers Proprietorship Registration at an all inclusive price of Rs.6,000/-

Partnership

IndiaFilings offers Partnership Registration at an all inclusive price of Rs.6,000/-

LLP

IndiaFilings offers LLP Registration at an all inclusive price of Rs.8000/-

Private Limited Company

IndiaFilings offers Private Limited Company Registration at an all inclusive price of Rs. of Rs.16,000/-

One Person Company

IndiaFilings offers One Person Company Registration at an all inclusive price of Rs. of Rs.16,000/-


Comments (25)

BHASKAR MEHTA

Nov 05, 2014 at 1:05 PM

Sir,
We wish to know whether LLP can take business loans from FRIENDS / FAMILY /RELATIVES JUST AS WE CAN TAKE THE SAME IN CASE OF proprietorship / partnership Co..
To my knowledge, this is not permitted by PVT. LIMITED and LIMITED COMPANIES.
If this is allowed by LLP, I wish to convert my Proprietary concern in to LLP.
Please give your advice.
Regards,

Viral Ghadiyali

May 11, 2015 at 10:28 PM

I am put up in Kandivali-Mumbai and planning to venture into Solar photovoltaics business. Need to discuss about company registration and further guidance. Kindly send your contact person and number or contact me on my cell number +919833867811. A personal meeting would be much helpful.

Chat Desk

Jun 13, 2015 at 12:31 PM

Dear Sir,

Thank you for contacting IndiaFilings.com!

One of our Business Advisory will call you shortly. Looking forward to work with you in the near future. Have a great day.

Regards,
IndiaFilings Team.

ruchi

Jun 30, 2015 at 1:54 PM

hello

i want to know which will be the best option amongst:

– to create a private ltd co
or
-a sole proprietorship
if i want to start a new business

Plz guide

Thanks n regards

IndiaFilings

Jul 01, 2015 at 10:05 AM

Dear sir,
Greetings from IndiaFilings.com, India’s premier online consulting co!!
Please provide your email address and contact number, so that we can ask our business adviser to call you.
Looking forward to work with you in the near future. Have a great day.
Thanks & Regards,

Benny

Jul 02, 2015 at 8:33 PM

Dear sir,
I am interested to know about a LLP and a OPC and how to go about registering one.
I am based in Kochi but will be operationalising this company in Karnataka.

Best regards

sarvesh arora

Jul 10, 2015 at 8:43 PM

Dear sir

i want to start business in coaching institute.. Education sector

What type LLP , private limited ya other.to regsiter.

In wat type i get business loan easy ?

manoj

Jul 13, 2015 at 11:28 AM

can opc convert into llp?

Rajanikanth

Jul 13, 2015 at 1:25 PM

I need to reguster my business

Please call me

Regards
Rajanikanth
9900116545

Dipak Desai

Oct 10, 2015 at 1:31 PM

i want start my own(Proprietorsheep) finance co, can i do this

Vijay

Oct 13, 2015 at 11:09 PM

Am planning to start a series of start ups , do i need to have a holding company under which all these startups would function.

Business Advisor

Oct 29, 2015 at 10:08 AM

Dear Sir,

Greetings from Indiafilings.com, India’s premier online consulting company !!!

We acknowledged the receipt of your mail. It’s our pleasure to assist you with your requirement, We think it is better to have a telephonic conversation with our business adviser for a detailed business commentary, so please let us know your contact number by mail to [email protected] to guide you better.

Looking forward to work with you in the near future.

Thanks & Regards,
Indiafilings Team.
044-4024 7777 / 88

Bharamappa K

Nov 07, 2015 at 10:42 PM

I wanted start Pharma business under OPC including online offerings. can i start being an MBA graduate without any pharma background. rgds Kharamappa K

Bharamappa K

Nov 07, 2015 at 10:44 PM

Deepak Jain

Nov 19, 2015 at 12:38 PM

How can I convert a partnership firm into a private limited company in which there are already two directors registered and I want to join them. But there will be scenario that is there share capital will be 0 i.e. they won’t bear any profit or loss of the company. Please suggest or call me at 08745032966. I need to take action at most priority. So please suggest an advise with cost so that I can proceed further.

punit

Jan 29, 2016 at 7:38 PM

i would like to have clarity and knowledge about the rules and allowed or not allowed for the following :-

A person is having partnerhip firm. he is starting new parnerhip LLP company with other new person.
can he tranact business among his both the partnership firm and partnership LLP company.
both are in the same line of business.

awaiting reply if any one has idea for the same.

Chandan Chaudhary

Feb 01, 2016 at 5:43 PM

In Proprietorship
Maximum no. of employe ?

IndiaFilings

Feb 26, 2016 at 6:55 PM

Hi chandan ,
You can hire n numbers empolyees in propritorship ,for further clarification you can call our business advisors @ 04440247777 .

IndiaFilings

Feb 26, 2016 at 7:17 PM

Hi punit ,
Please call our business advisors @ 04440247777 or email [email protected]

Abhishek P

Apr 21, 2016 at 10:56 PM

Spoke to one of your executives but need further clarification on the following:

1. Can LLP/OPC be changed into PVT LTD later?

2. I want to register a company in Bengaluru but our production will happen only in Bihar and Bengal. What will be additional regulatory work needed?

3. What will be the regulatory fee for the minimum paid up capital of one lakh? Is it inclusive or extra on the charges you have mentioned?

4. We shall not be starting operations immediately but need only to safe keep the name. Will it be ok if the company is registered with no immediate operations?

Please get back.

Regards

Abhishek

Sumesh

Apr 22, 2016 at 12:40 PM

Hi Abhishek,
It’s our pleasure to assist you we think it is better to have a telephonic conversation with our business adviser please call 04440247777 or email your requirements to [email protected]

Santosh R

May 05, 2016 at 1:01 PM

Dear Sir,

Am santosh from pune, i would like to start the software company for developing Projects under for hospital platform..
so please kindly guide me sir..
9890071609

Sumesh

May 05, 2016 at 6:43 PM

Hi Santhosh,
Its our pleasure to assist you our business advisors will contact you shortly.

Hetal

Apr 10, 2017 at 12:24 PM

Hi, I am in to agriculture and wanted to know more about LLP, a) my income from agriculture is tax free however if we convert it to LLP does it change the taxation? My income would still be from agriculture only.
B) As an LLP can I borrow loan from friends and give them some interest for my agriculture activities?
C) I have friends investing in my agri projects .Is it advisable to include my partners in the LLP or is it better to have an LLP on my name with family and then my LLP invests in agriculture with my partners does that increase my liability or is it more advantageous to me.
D) How does having an LLP help better as compared to an individual ( me) doing farming with the help of my investors .

PARAG K

Apr 21, 2017 at 8:35 AM

Hello,

I want to start a company. It will deliver websites for clients as well as it will provide training to students.

Can you please suggest? Do I need to register LLP or OPC?

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