When starting a business in India, entrepreneurs often compare a Limited Liability Partnership (LLP) and a One Person Company (OPC). Both structures come with unique benefits and certain limitations, so the choice depends on your business goals and growth plans. While LLP Registration in India requires at least two partners, OPC Registration in India allows a single individual to start and manage a company. Both registrations can be completed online through MCA e-forms. At JustStart, we help you navigate these processes smoothly with expert consultancy and step-by-step support.
What is a One Person Company (OPC)?
An OPC uniquely defines itself by its name, which states that it is a One Person Company. This is the best option for small businesses, as a single person runs it. A company incorporates a One Person Company under the Companies Act, 2013. The ROC registers it.
What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership Company must have at least 2 partners, and there is no limit on the maximum number of partners. The liabilities of the partners are limited by this firm, which means that at the time of any mishap, the personal assets of the partners will not be affected. The provisions of the Limited Liability Partnership Act, 2008, incorporate an LLP.
Similarities and Differences Between OPC and LLP Companies
Members- The owner of a One Person Company is the only member. Although the owner may employ several employees to oversee the operations of the company, only one person would have 100% ownership.
However, the Limited Liability Partnership firms can have a minimum of 2 partners, and there is no limit on the maximum number.
Capital- Both One-person companies and limited liability partnerships do not require any specific amount of capital for their companies.
Compliances- In comparison to LLP, OPC has a higher level of statutory compliance. However, various penalties are prescribed for both OPC and LLP in case of non-compliance.
Audit Requirements- Audit is mandatory in a One Person Company, irrespective of its share capital, directors, and members. Whereas in LLP, an audit is mandatory only when the turnover exceeds the limit of Rs 40 lakh and the share capital exceeds Rs 25 lakh.
Tax Payable- The corporate tax rate of an LLP is around 30% whereas for an OPC it is around 25%.
Inheritance Entity- LLP has a separate legal entity. It has perpetual succession, which means the company will continue its existence irrespective of any insolvency of any of its partners.
A One Person Company also has a separate legal entity, but mandatorily requires a nominee (with their consent) at the time of incorporation of the company.
One Person Company (OPC) Registration Process in India
Step 1: Request a DSC
In One Person Company Registration, you have to first apply for the Digital Signature Certificate (DSC) along with the Digital Identification Number (DIN) of the director/member. It is mandatory for OPC registration.
Step 2: Name Approval
Name approval of the company would be done by filling up the Spice form on the website of the Ministry of Corporate Affairs (MCA) itself. If your approached name gets rejected, you can even reapply by filling out the same Spice+ Part-A form.
Step 3: Required Documents
One Person Company online registration requires all the KYC documents with the proposed fees.
- Passport-size photo,
- Copy of ID and E-mail ID
- Phone number, Specimen Signature
- Address proof of the registered company with NOC (if rented).
Step 4: File Spice+ Part-B Form
All documents are required to be up-to-date while filing the e-forms. It includes INC-32, 33, and 34. OPC; online registration also requires ID proof, address proof, and a digital signature certificate of the subscriber and the nominee.
Step 5: Certificate of Incorporation
After going through all your documents and data, the registrar will approve your request for the company’s incorporation. Furthermore, MCA will issue a Certificate of Incorporation.
Limited Liability Partnership (LLP) Registration Process in India
Step 1: Apply for DIN or DPIN
Apply for each designated partner's Identification Number. It could be easily done with the e-form.
Step 2: Registration on the Portal
Register yourself in the suitable category for the LLP Registration. A Digital Signature Certificate is also required in the process of signing off. You will be provided access to the e-forms.
Step 3: Name Approval
Use Form-Fillip to bring forward your proposed names for your LLP. Proceed to the next step if the name gets approved.
Step 4: Required documents
Every document required is for all the proposed partners for LLP Registration.
- PAN Card, ID proof
- Partners’ address proof
- Passport-size photo
- Email and phone number
- Registered office address with NOC (if the office is in a rented place)
Step 5: Certificate of Incorporation
After all the checking of your documents, the Ministry of Corporate Affairs will provide you with a Certificate of Incorporation.
Step 6:Agreement
In this process, provide all the agreed terms in the agreement of your LLP. Prepare and file it within 30 days. It could be done with the help of a professional like a CA, CS, or any authorised expert.
Eligibility Criteria For LLP Registration and OPC Registration
Eligibility Criteria for OPC Registration
- The nominee must be 18 years or above, with full consent to act in the role.
- The business owner must be an adult with the legal capacity to manage and operate a business.
- The owner must be an Indian citizen or an NRI, as foreign citizens are not allowed.
Eligibility Criteria for LLP Registration
- At least one partner must be an Indian resident and citizen to comply with Indian laws.
- Each partner must be at least 21 years old to have the legal capacity to enter into a contract.
- A minimum of 2 partners is compulsory for forming an LLP.
- The consent of all partners is required while preparing the LLP agreement.
- The capital contribution should be mutually decided beforehand.
- For a smooth registration process, all partners must provide valid and legible documents.
Which is Better for Your Business: OPC or LLP Company?
Choosing between an OPC and an LLP depends on your business goals and how you plan to operate. For solo entrepreneurs seeking complete control over their business, an OPC is the ideal structure. It is simple to manage, gives you limited liability, and is perfect for small ventures.
On the other hand, if you are starting with partners or want flexibility in ownership, an LLP is more suitable. It offers unlimited partner capacity, protects personal assets, and has fewer compliance requirements compared to OPC.
In simple terms, choose an OPC if you’re starting alone, and opt for an LLP if you’re teaming up with partners.
Conclusion
Both of these firms provide ease in marketing. Preferring a business type completely depends on one’s requirements. However, a Limited liability partnership is a preferred idea because it provides the benefits of both private limited and partnership firms. Also, no partner is liable for any misdeed done by another partner. Whereas a One-Person Company works well for small businesses due to its simple work mechanism.
JustStart is here to assist you with all counselling services. We offer our specialised skills to our clients. Once you connect with us, it becomes our responsibility to serve you in the best way! For more information or any queries, feel free to contact us.
Frequently Asked Questions (FAQs)
1. Which is better for a startup, OPC or LLP?
If you are an individual starting small, an OPC is more suitable since it allows a single person to run a company. But if you plan to start with partners or want flexibility in ownership, an LLP is a better choice.
2. Can an OPC be converted into an LLP later?
Yes, a One Person Company can be converted into an LLP by following the process laid down under the Companies Act and LLP Act. Proper approvals and filings are required for the conversion.
3. Is LLP registration cheaper than OPC registration?
Generally, the government fees for OPC and LLP registration are almost similar, but LLP may have slightly lower compliance costs over the years compared to OPC.
4. Can a foreign national register an OPC or LLP in India?
An OPC can only be registered by an Indian citizen or an NRI. However, a foreign national can become a partner in an LLP, provided one partner is an Indian resident.
5. What is the difference in tax between OPC and LLP?
The corporate tax rate for OPCs is around 25% (for small companies), whereas LLPs are taxed at a flat rate of 30%. This difference is often a deciding factor for entrepreneurs.
6. Which structure has more compliance requirements?
An OPC must undergo a mandatory audit, whereas an LLP is only required to get audited if its annual turnover crosses ₹40 lakh or if the capital contribution is more than ₹25 lakh.
