LLP vs OPC

LLP is a separate legal entity having limited liability, with minimum two partners, exhibit foreign ownership, low compliance, more flexible over OPC.

 

More choices are available now with the introduction of the Limited Liability Partnership Act and the Companies Act, 2013. Available structures of business entity are actually distinct from one another.

If you are looking to run your business without external funding and want to have control over all the operations of the company, LLP or OPC will work best.

If you are wondering whether to register a One Person Company or Limited Liability Partnership, here is a basic comparison chart of the LLP and OPC, credible forms of business:

What is One Person Company (OPC)?

The One Person Company (OPC) is a hybrid form of business which combines features of Sole Proprietorship and Company. A One Person Company needs only one member who is the sole owner/director of the company as well as being a shareholder. In an OPC the liability is limited to the company and not the members of the company giving the benefit of a Limited Company. Hence, why share the cake when you can own it all.

What is Limited Liability Partnership (LLP)?

Limited Liability Partnership (LLP) is an advanced form to traditional form of normal partnership having benefits of limited liability of partners and perpetual succession. An LLP can be registered with the Ministry of Corporate Affairs.
 

LLP vs OPC: Key Differences

 
 

Particulars

OPC

LLP

Registration An One Person Company is registered under the Companies Act, 2013 with the Ministry of Corporate Affairs Limited Liability Partnership is registered with the MCA (Ministry of Corporate Affairs) and is done under the LLP Act, 2008.
Name Approval of Entity The Name approval process needs approval from ROC. “One Person Company” needs to be mentioned in brackets below the name of such company. The Name of the LLP needs approval from the Registrar of Company. Already existing names are not permitted. The Name of the LLP must have an ending with "Limited Liability Partnership" or "LLP"
Legal Status of the Entity An One Person company is a distinct entity. Hence, the Directors and shareholders are not answerable for any debts neither are they responsible for the liabilities of the Company. A Limited Liability Partnership is a distinct legal entity which is registered under the LLP Act, 2008. In LLP, the partners or members are not responsible for the liabilities and debts of the Company.
Liability of the Members The Shareholders in an OPC are liable only to their shares, which means it has limited liabilities. The Partners of an LLP have limited liabilities and it extends only till the amount that they have contributed.
Transferability Ownership can be transferred to the  “nominee”  appointed in case of the director’s death or incapacity to contract. Ownership can be transferred
Number of Members Minimum one person, who has to be an Indian resident, is required to start an OPC. It is mandatory to appoint a “nominee”. An LLP needs to have minimum of two persons to start doing business. It can have unlimited members.
Foreign Ownership Foreigners are not allowed to invest in OPC. They have to be a Resident of India. To be an investor or member of an LLP, the foreign nationals need to get prior approval of the Reserve Bank of India.
Taxation No provisions mentioned in the IT Act yet. Hence is treated like a Private Limited i.e. 30% in addition to the surcharge. LLP profits are also taxed 30% in addition to the surcharge as applicable.
Annual Statutory Meetings Not required, if there is only one director. Not Required
Annual Filing OPC must file the Financial statements and annual return with ROC. It is must to file the Annual Statement of Accounts & Solvency along with the Annual Returns and Tax Returns with the Registrar each year.
Conversion Cannot be converted before 2 years Cannot be converted into a company

 


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