Choosing the right structure decides how you raise money, how much compliance you face and how your liability is protected. Here is a plain-English comparison of a Private Limited Company, an LLP and a One Person Company.
One of the first decisions every founder makes is the legal structure of the business. It affects how you raise money, how much paperwork you face every year, and how well your personal assets are protected. The three most popular options in India are a Private Limited Company, a Limited Liability Partnership (LLP) and a One Person Company (OPC).
Quick comparison
| Private Limited | LLP | One Person Company | |
|---|---|---|---|
| Law | Companies Act, 2013 | LLP Act, 2008 | Companies Act, 2013 |
| Owners | Minimum 2 shareholders and 2 directors; up to 200 members | Minimum 2 designated partners; no maximum | 1 member plus a nominee |
| Liability | Limited to share capital | Limited to agreed contribution | Limited to share capital |
| Raising investment | Easiest: can issue shares to investors and ESOPs to staff | Cannot issue shares, so not suited to equity investors | Must convert to a Private Limited Company to bring in investors |
| Statutory audit | Always required | Only above turnover or contribution limits | Always required |
| Yearly filings | AOC-4, MGT-7/7A, ADT-1, board meetings, AGM | Form 8 and Form 11 | AOC-4, MGT-7A, board meetings |
Choose a Private Limited Company if…
- You plan to raise money from angel investors or venture capital.
- You want to offer ESOPs to attract good employees.
- You want the credibility that customers, banks and large clients expect from a company.
Choose an LLP if…
- You are a professional or service firm with two or more partners.
- You want limited liability with lower yearly compliance and cost.
- You do not plan to raise equity funding.
Choose a One Person Company if…
- You are a solo founder who wants limited liability and a company structure.
- You may add partners or investors later; an OPC can be converted into a Private Limited Company.
Still not sure?
The right choice depends on your plans for funding, partners and growth. Our experts will recommend the best structure for your situation on a free call, and handle the full registration online. See prices on our company registration services.
Need help? Call StartupMates on +91 93113 95139 or book a free consultation.
Need help with this?
Our experts can handle it for you. The first call is free.