What is better LLP and OPC?

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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 applicableCompany act 2013LLP act 2008
Minimum share capitalLimited Liability Partnership Act, 2008Minimum Share Capital No requirement for minimum share capital. If the capital exceeds 50 lakhs, the OPC is converted to private. LimitedNo requirement for minimum share capital
Members requiredMinimum-Maximum only oneMinimum two maximum no limit
Director requiredMinimum 1, Maximum 15Minimum 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 fillingFinancial statements and annual returns have to be filed with the registrarAnnual accounts and annual returns will be filed with the ROC
FDINot eligible for FDIQualified via automatic route
Transferability of shareMOA can be made by alteringBefore a notary public, the agreement may be transferred by execution
Suitable for which typeIndividuals 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.

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1 Comment

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