Difference between LLP, Pvt Ltd, OPC, Partnership and Proprietorship

Introduction

This article will provide you with the difference between business formations. If you want to start a new business and you are not able to pick one form then here is a glance of differences between various forms. There are few forms prevailing in India such as proprietorship, partnership, One Person Company, limited liability partnership and Pvt Ltd company. The difference between them on various bases is mentioned below:

Difference between business Formations

           TYPE OF        

               COMPANY

 

BASIS

Proprietorship Partnership LLP Private limited company OPC
Registration

 

Not Compulsory Optional under partnership act 1932 Registered under MCA Registered under MCA Can be registered under MCA and Companies Act 2013
Legal status of entity

 

Not considered as a separate legal entity Not considered as a separate legal entity Considered to have a separate legal entity Considered to have a separate legal entity Separate legal entity
Members liability

 

Unlimited liability Unlimited liability Liability of its members is limited Limited to the extent of share capital

 

Limited to the extent of share capital
Minimum number of member

 

Sole Proprietorship At least 2 persons

 

At least 2 persons At least 2 persons Minimum number of 1 person

 

Maximum number of members

 

Maximum 1 person

 

Banking Sector – 10

Other Sector – 20

No restriction 200

 

Maximum 2 person
Foreign ownership

 

Not allowed Not allowed Allowed by permission from RBI Allowed Allowed if one is the director and other is the nominee. Both the director and the nominee cannot be foreign citizens
Transferability

 

Not allowed Not allowed Can be transferred Can be transferred Allowed to 1 person only
Survival

 

comes to end on death or retirement of the member comes to end with the death of its anyone member Existence independent on partners Life of the company will go on forever Existence is independent on directors or nominee
Taxation

 

Taxed as an individual Tax rate is 30% on the company’s profit Tax rate is 30% on profits plus cess and surcharge Tax rate is 30% on profits plus cess and surcharge Tax rate is 30% on profits plus cess and surcharge
Annual filings

 

Income tax returns with the registrar of the company Income tax return is filed with the registrar of the company Filed with the registrar of the company Filed with the registrar of the company Filed with the registrar of the company

 

About the Author:

Himanshu Jain is the founder of LegalRaasta – India's top portal for registration, trademark, return filing and loans. Himanshu is a CFA (US) & MBA (ISB). He has over 8+ years of corporate / consulting experience with top firms like McKinsey

3 Comments

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