The One Person Company and Limited Liability Partnership are two separate business structures governed by two separate Acts respectively, such as the Companies Act and the Limited Liability Partnership Act. The concept of One Person Company encourages solo and enthusiastic entrepreneurs to operate their enterprises. However, incorporation into a limited liability partnership requires two individuals. Here we have compared two important forms of business – OPC and LLP.
One Person Company (OPC) means a company run by a single person. One Person Company is effectively a company with only one shareholder as a member.
A Limited Liability Partnership (LLP) is a form of business where at least two members are required and there is no limit on the maximum number of members.
Comparison between OPC and LLP
There are some similarities as well as some differences between OPC and limited liability partnerships. Let us both discuss with Chartered Munshi for your better understanding.
Similarity between One Person Company and Limited Liability Partnership
Separate legal entity: They both have separate legal entities. This means that One Person Company or Limited Liability Partnership is treated as a separate person in the eyes of the law.
Benefit on taxes: Tax benefit is given for both types of business structures. The tax benefit will be 30% of the profit.
Limited Liability: In the case of OPC sole proprietor and the case of LLP, the liabilities of the partners will be limited.
Registration process: Both types of businesses are required to be registered with the Ministry of Corporate Affairs.
OPC and LLP Differences Comparison Table
|Law applicable||Company act 2013||LLP act 2008|
|Minimum share capital||Limited Liability Partnership Act, 2008Minimum Share Capital No requirement for minimum share capital. If the capital exceeds 50 lakhs, the OPC is converted to private. Limited||No requirement for minimum share capital|
|Members required||Minimum-Maximum only one||Minimum two maximum no limit|
|Director required||Minimum 1, Maximum 15||Minimum 2, Maximum no limit|
|Board meeting||One meeting in each half of the year. The difference between the two meetings should be at least 90 days.||Not necessary|
|Statutory audit||Compulsory||Not compulsory|
|Annual filling||Financial statements and annual returns have to be filed with the registrar||Annual accounts and annual returns will be filed with the ROC|
|FDI||Not eligible for FDI||Qualified via automatic route|
|Transferability of share||MOA can be made by altering||Before a notary public, the agreement may be transferred by execution|
|Suitable for which type||Individuals whose capital requirement is 50 lakhs and turnover is less than 2 crores.||Business, Startup, etc|
An individual company and Limited Liability Company have a lot of similarities, yet they both differ in their many characteristics and structures. If you are an individual who wants to start a business, then certainly the concept of One Person Company (OPC) has been introduced for you, which aims to encourage solo and enthusiastic entrepreneurs to operate their venture. Whereas if you are more than one person who wants to start a business together with limited liability than limited liability then this is for you. Choose our Chartered Munshi experts service for more details and consultancy.