Compare business structures in India
Private Limited, LLP, OPC, partnership and sole proprietorship compared on liability, compliance, tax and funding.
What is the difference between a Private Limited Company and an LLP?
Both give limited liability and a separate legal identity. The differences that decide it are funding and compliance. A Private Limited Company can issue equity shares and is the only workable structure for angel or venture funding, but requires a statutory audit every year and files AOC-4, MGT-7A, ADT-1 and DIR-3 KYC. An LLP cannot easily issue equity, but only needs an audit once turnover exceeds Rs 40 lakh or contribution exceeds Rs 25 lakh, and files only Form 11 and Form 8.
What is the difference between an OPC and a sole proprietorship?
A One Person Company is a separate legal entity with limited liability, so a claim against the business does not reach the owner's personal assets. A sole proprietorship is not a separate entity and carries unlimited personal liability. The trade-off is cost: an OPC requires a statutory audit every year and annual ROC filings, while a proprietorship has neither.
What is the difference between an LLP and a partnership firm?
An LLP is a separate legal entity registered with the Registrar of Companies, and partners' liability is limited to their contribution. A partnership firm is not a separate legal entity, registration with the Registrar of Firms is optional, and partners carry unlimited liability that is joint and several.
Which structure has the lowest compliance burden?
Sole proprietorship and partnership firm, since neither has ROC filings or a structure-driven statutory audit. But every structure still files an annual income tax return, faces the same GST thresholds, has the same TDS obligations, and is subject to a tax audit under section 44AB once turnover crosses the limit.
Can I change my business structure later?
Yes, but it costs more than choosing correctly at the start. Converting an LLP or partnership firm into a Private Limited Company is effectively a fresh incorporation with a takeover of the existing business. An OPC must convert to a Private Limited Company before it can take on outside shareholders.