OPC V/S LLP- what form is better for you
December 16, 2021
OPC and LLP- Comparison and Differences between the two Business Structures
OPC and Limited Liability Partnership are two different Business Structures governed by two different acts namely Companies Act and Limited Liability Partnership Act respectively. The concept of One Person Company encourages single and enthusiastic entrepreneurs to operate their own venture. However, Limited Liability Partnership requires two persons for incorporation. Here we have compared two important form of business- OPC and LLP.
Do you want to start a new business but have confusion as to what structure of business you should choose? This article might help you to ease your decision.
Table of Content
What is the meaning of One Person Company and Limited Liability Partnership?
One Person Company (OPC) means a Company which has only one person as its member. An OPC is effectively a company that has only one shareholder as its member.
A Limited Liability Partnership (LLP) is the form of the business where minimum two members are required and there is no limit on the maximum number of members. The liability of the members of an LLP is limited.
Comparison between OPC and LLP
There are few similarities as well as a few differences between the OPC and Limited Liability Partnership. Let us discuss both here for your better understanding.
Similarities Between One Person Company and Limited Liability Partnership
- Separate legal entity: Both of them have separate legal entity. That means OPC or LLP is treated as a different individual in the eyes of law.
- Benefits on taxes: To the both types of business structures tax benefits are given. The tax benefits would be 30% from the profits.
- Limited Liability: In case of OPC the Sole owner and in case of LLP, the liabilities of the partners would be limited.
- Registration Process: Both the types of businesses are required to be registered with the Ministry of Corporate Affairs.
Know : The benefits of One Person Company
OPC and LLP – Quick Comparison Table
|Particulars||OPC||Limited Liability Partnership|
|Law Applicable||Companies Act 2013||Limited Liability Partnership Act, 2008|
|Minimum share capital||No requirement for minimum share capital. If capital exceeds 50 lakhs, OPC gets converted to Pvt. Ltd.||No requirement for minimum share capital|
|Members Required||Minimum one
Maximum No limit
|Directors required||Minimum one
Two designated partners
Maximum not applicable
|Board meeting||One meeting in each half of the year. The gap between the two meetings must be at least 90 days||Not necessary|
|Statutory Audit||Compulsory||Not compulsory unless partner’s contribution exceeds 25 lakhs or annual turnover exceeds 40 lakhs|
|Annual Filing||Financial Statements and Annual returns to be filed with registrar||Annual accounts and Annual returns to be filed with RoC|
|Transfer-ability of shares||Can be made by altering MOA||Can be transferred by executing agreement before a notary public|
|Foreign Direct Investment||Not eligible for FDI||Eligible via automatic route|
|Suitable to which type||Individuals whose capital requirements is less than 50 lakhs and turnover is less than 2 crs.||startups , Business, trade, manufacturers etc.|
|Company Name||Should end with (OPC) Pvt. Ltd./ (OPC) Ltd.||Should end with LLP|
Get Answer to your Queries: FAQs on Formation of LLP in India?
One Person Company and LLP has a lot of similarities yet they both are different in many of its characteristics and structures. If you are one person who wants to start a business One Person Company is definitely for you as the concept of One Person Company (OPC) was introduced with an objective to encourage single and enthusiastic entrepreneurs to operate their own venture. While in case you are more than one person who wishes to start the business together with limited liability than Limited Liability Partnership is for you.
Limited Liability Partnership
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