What is an OPC?
A One Person Company (OPC) is a private limited company formed by a single person. It offers limited liability, a separate legal identity, and is suitable for solo business owners.
Key Features of OPC:
- One shareholder and one nominee: Suitable for solo entrepreneurs, with a nominee in place in case of unexpected events.
- Single director (can also be the owner): Allows one person to run and manage the company alone.
- Mandatory annual audit: Audit is compulsory every year, regardless of the business turnover.
- Cannot raise equity capital: Public equity fundraising is not permitted under the OPC structure.
What is an LLP?
A Limited Liability Partnership (LLP) is a partnership where all partners have limited liability. It combines the flexibility of a partnership with corporate advantages.
Key Features of LLP:
- At least two designated partners: Requires a minimum of two people to start.
- No cap on number of partners: You can have unlimited partners with varied responsibilities.
- Audit required only beyond threshold: Audit needed only if turnover exceeds ₹40 lakh or capital exceeds ₹25 lakh.
- Cannot issue shares: LLPs do not have shareholding; hence cannot raise equity capital.
Key Differences Between OPC and LLP
| Feature | OPC | LLP |
| Minimum Members | 1 (with a nominee) | 2 Partners (at least) |
| Legal Identity | Separate from owner | Separate from partners |
| Taxation | 25% as Company | 30% as Partnership |
| Annual Audit | Mandatory | Required only if turnover > Rs. 40 lakh |
| Foreign Investment | Restricted | Allowed via automatic route |
Which is Better: OPC or LLP?
Here’s a quick way to assess which structure suits your needs better:
| Criteria | Best Choice |
| Starting solo | OPC |
| Planning to raise FDI | LLP |
| Need for full ownership | OPC |
| Looking for tax benefits | OPC (lower rate) |
| Fewer compliance formalities | LLP |
Explanation:
- Choose OPC if you’re starting alone and want full control with limited liability.
- Choose LLP if you’re working with partners and may need foreign investment or prefer flexible compliance.
- OPC is better if you prefer company structure and lower tax rate.
- LLP is better if you want ease in operations and less audit burden.
Benefits of OPC
- Full Control: The founder has complete decision-making authority.
- Limited Liability: Personal assets are safe from business debts.
- Legal Identity: Offers business credibility and brand trust.
- Credibility: Builds a stronger image with banks and customers.
- Continuity: Business continues through nominee if owner exits.
Benefits of LLP
- Partner Flexibility: Ideal for multiple co-founders with shared duties.
- Lower Compliance: Audit is not mandatory unless turnover crosses the limit.
- Limited Risk: Shields partners’ personal property from liabilities.
- Foreign Investment Ready: FDI allowed without special approval.
- Cost-Effective: Lower registration and maintenance costs.
Challenges in OPC
- Single Owner Restriction: Not suitable for co-founded startups.
- FDI Barriers: Foreign investment needs prior government approval.
- Mandatory Audit: Required regardless of annual turnover.
- Limited Fundraising Options: Cannot issue equity to investors.
Challenges in LLP
- No Share Capital: Cannot raise equity funding from the public.
- Needs Two Partners: Not viable for solo founders.
- Higher Tax Rate: LLPs are taxed at a flat 30%.
- Lower Recognition: Some industries prefer a private limited structure.
How to Register an OPC or LLP in India?
How to Register an OPC:
- Obtain DSC and DIN: Get Digital Signature Certificate and Director Identification Number.
- Reserve company name: Use the RUN (Reserve Unique Name) service on MCA.
- File SPICe+ form: Fill out the incorporation form with necessary attachments.
- Get incorporation certificate: Once approved, the Registrar of Companies issues the Certificate.
- Appoint nominee: Mention nominee in MOA to ensure business continuity.
How to Register an LLP:
- Obtain DSC and DPIN: Each partner must get a Digital Signature Certificate and Designated Partner Identification Number.
- Reserve LLP name: Apply through MCA portal under the RUN-LLP service.
- File FiLLiP form: Submit the Form for Incorporation of LLP with required documents.
- Submit LLP Agreement: Draft and file LLP Agreement within 30 days of incorporation.
- Get Certificate of Incorporation: Once processed, MCA issues the registration certificate.
You can validate it from www.mca.gov.in.
Real Life Example
In Pune, a marketing professional launched her consultancy as an OPC to work independently and still have a registered company to deal with larger corporate clients. Later, when she collaborated with a strategist from Bengaluru, they restructured the business as an LLP to jointly manage operations, bring in new partners, and expand across cities with shared responsibilities.
Conclusion
Choosing between OPC and LLP depends on ownership needs, funding, and compliance comfort. OPC is best for solo founders seeking control and brand credibility. LLP suits partners looking for flexibility, tax efficiency, and investment readiness. For expert guidance, EbizFiling can help you get started seamlessly.
Suggested Read :
Mandatory Compliance List for OPC
LLP Form 8 Filing and Due dates
Importance of an LLP Certificate
LLP agreement vs Partnership Deed
Hello sir,
You can form an OPC, LLP or a Private Limited Company for your objective for industrial services like maintenance of machines. . Please contact us at +919643203209 / mail us at info@ebizfiling.com, if you need any additional information or assistance.
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