OPC V/S LLP - Which one is better for you?

OPC V/S LLP - Which one is better for you?

Once you start with a business, you always concern about the structure of the business. At the initial stage of the business, most of the people end up with a question that is whether OPC or LLP.

Let’s understand each and everything about both these two structures i.e. LLP and OPC in detail and at the end of this article you will surely find the appropriate structure for your business.

One Person Company (OPC)

The entrepreneurs who are looking forward to form a company with limited liability should register for OPC. An OPC is exclusively for those who are willing to take one step ahead to run their business in more effective and efficient manner with an intention to become a legal entity in the eyes of law.

One Person Company is the only company which has only one shareholder as its member. The concept of One Person Company encourages single and enthusiastic entrepreneurs to operate their own venture.

According to Rule 3 of the Companies (Incorporation) Rules 2014 say, only a natural person who is an Indian citizen and resident in India can incorporate a One Person Company. Even a nominee for OPC shall be a Indian resident.

An OPC can be registered with a minimum capital of Rs 1 lakh only. But if the paid-up capital exceeds Rs. 50 lakhs, then the OPC has to be converted into a private limited company. The LLP will also convert into a private company when the OPC’s average turnover for 3 consecutive years exceeds Rs 2 crore.

Limited Liability Partnership (LLP)

If you are running a business with partners, then LLP is the best option for your business. An LLP is a combination of partnership firm and company.

In LLP form, partners can run a business under the roof of limited liability. The liability of partners is limited as much as their contribution.

An LLP works best for startups and small businesses that are run by partners and want to have the nominal regulatory compliance.Incorporation of an LLP is also cheaper and easier to get.

Comparison between OPC and LLP

The below table will briefly explain you about OPC and LLP and its requirements;

Particulars OPC Limited Liability Partnership
Law   Applicable Companies Act 2013 Limited Liability Partnership   Act, 2008
Minimum   share capital No requirement for minimum share   capital. If capital exceeds 50 lakhs, OPC gets converted to Pvt. Ltd. No requirement for minimum share   capital
Members Required Minimum one Minimum 2
Maximum   one Maximum No limit
Directors required Minimum one Two designated partners
Maximum   15 Maximum not applicable
Board   meeting One meeting in each half of the   year. The gap between the two meetings must be at least 90 days Not necessary
Statutory   Audit Compulsory Not compulsory unless partner’s   contribution exceeds 25 lakhs or annual turnover exceeds 40 lakhs
Annual   Filing Financial Statements and Annual   returns to be filed with registrar Annual accounts and Annual   returns to be filed with RoC
Liability Limited Limited
Transfer-ability   of shares Can be made by altering MOA Can be transferred by executing   agreement before a notary public
Foreign   Direct Investment Not eligible for FDI Eligible via automatic route
Suitable   to which type Individuals whose capital   requirements is less than 50 lakhs and turnover is less than 2 crs. startups , Business, trade,   manufacturers etc.
Company   Name Should end with (OPC) Pvt. Ltd./   (OPC) Ltd. Should end with LLP
Nominee Not   required One   Nominee is required
Distribution   of Profit Profit is exempt in the hands of Partners Profit is exempt in the hands of Partners
No tax is to be paid on the distribution of profit by the LLP OPC Private   Company has to pay dividend distribution tax on dividend.
Dissolution LLP liquidator is appointed to file the copy of the   order to Tribunal with the registrar for LLP’s winding up Where the individual   shareholder is not active and NOC is to be obtained from the creditors before   winding up of OPC


Even after having many similarities between OPC and LLP they both have different characteristics. OPC is specifically for individual entrepreneur who is looking forward to take his business once step ahead and LLP is mostly for the efficient team who is running startups.

Show Comments