Partnership vs LLP vs Private Limited Company
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/-
Income Tax eFiling
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Comments (25)
BHASKAR MEHTA
Nov 05, 2014 at 1:05 PM
Sir,
ReplyWe 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.
ReplyChat 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,
ReplyIndiaFilings 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
ReplyIndiaFilings
Jul 01, 2015 at 10:05 AM
Dear sir,
ReplyGreetings 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
Replysarvesh 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 ?
Replymanoj
Jul 13, 2015 at 11:28 AM
can opc convert into llp?
ReplyRajanikanth
Jul 13, 2015 at 1:25 PM
I need to reguster my business
Please call me
Regards
ReplyRajanikanth
9900116545
Dipak Desai
Oct 10, 2015 at 1:31 PM
i want start my own(Proprietorsheep) finance co, can i do this
ReplyBusiness 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,
ReplyIndiafilings Team.
044-4024 7777 / 88
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.
ReplyBharamappa 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
ReplyBharamappa K
Nov 07, 2015 at 10:44 PM
ReplyDeepak 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.
Replypunit
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.
ReplyIndiaFilings
Feb 26, 2016 at 7:17 PM
Hi punit ,
ReplyPlease call our business advisors @ 04440247777 or email [email protected]
Chandan Chaudhary
Feb 01, 2016 at 5:43 PM
In Proprietorship
ReplyMaximum no. of employe ?
IndiaFilings
Feb 26, 2016 at 6:55 PM
Hi chandan ,
ReplyYou can hire n numbers empolyees in propritorship ,for further clarification you can call our business advisors @ 04440247777 .
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
ReplySumesh
Apr 22, 2016 at 12:40 PM
Hi Abhishek,
ReplyIt’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..
Replyso please kindly guide me sir..
9890071609
Sumesh
May 05, 2016 at 6:43 PM
Hi Santhosh,
ReplyIts 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.
ReplyB) 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?
Reply