Proprietorship vs Partnership vs OPC vs LLP vs Private Limited Company
 
The steps in starting a small business include creating a viable business plan, doing the relevant market research, finalizing funding sources and pinning down the business model.
Once you have validated your idea with these steps, you will have to undertake the legal formalities of setting up a business in the country.
Selection of business entity is among the first legal decision taken by an Entrepreneur while starting a new business. 
It’s vital for the Entrepreneur to understand the pros and cons of every single business entity and choose the correct one. Among the choice of For-Profit entities available like Proprietorship, Partnership, Limited Liability Partnership, One Person Company, Private Limited Company, and Public Limited Company, a few are ideal for most Entrepreneurs.
In this article, we compare those types of entities viz. Proprietorship vs Partnership vs One Person Company vs LLP vs Private Limited 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.

One Person Company

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

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.


 
 


Name of the Entity


Proprietorship

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

One Person Company

The choice of the 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”.

LLP

The choice of the 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 the 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”.


 


Legal Status of Entity


Proprietorship

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

Partnership

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

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.

LLP

LLP is a separate legal entity registered under the LLP Act, 2008. The partners of an 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.


 


Member(s) Liability


Proprietorship

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

Partnership

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

One Person Company

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

LLP

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

Private Limited Company

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


 


Minimum Number of Members


Proprietorship

Can have only one person as a member.

Partnership

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

One Person Company

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

LLP

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

Private Limited Company

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


 


Maximum Number of Members


Proprietorship

Can have only one person as a member.

Partnership

The maximum number of partners can be only 20.

One Person Company

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

LLP

An LLP can have an unlimited number of Partners.

Private Limited Company

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


 


Foreign Ownership


Proprietorship

Foreigners are not allowed to start a Proprietorship.

Partnership

Foreigners are not allowed to start a Partnership.

One Person Company

Director and Nominee Director cannot be Foreigners.

LLP

Foreigners are allowed to invest in an 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.


 


Transferability


Proprietorship

Not transferable.

Partnership

Not transferable.

One Person Company

Ownership can be transferred.

LLP

Ownership can be transferred.

Private Limited Company

Ownership can be transferred by way of share transfer.


 


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.

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.

LLP

Existence of an 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.


 


Taxation


Proprietorship

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

Partnership

Partnership 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.

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.


 


Annual Statutory Meetings


Proprietorship

No requirements to conduct annual statutory meetings.

Partnership

No requirements to conduct annual statutory meetings.

One Person Company

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.


 


Annual Filings


Proprietorship

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

Partnership

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

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.

LLP

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


 


Registration Cost


Proprietorship

HG Corporate Advisors Don’t offer Proprietorship Registration.

Partnership

HG Corporate Advisors Don’t offer Partnership Registration.

One Person Company

HG Corporate Advisors offers One Person Company Registration at an all inclusive price of Rs. of  `11,000/- 

LLP

HG Corporate Advisors offers LLP Registration at an all inclusive price of  `8,300/-

Private Limited Company

HG Corporate Advisors offers Private Limited Company Registration at an all inclusive price of Rs. of  `13,700/-


 
Related:

5 Reasons Why You Should Register Your Company Now!

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