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Private Limited vs LLP vs Proprietor vs Partnership Firm

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Private Limited vs LLP vs Proprietor vs Partnership Firm

WHICH LEGAL FORM TO CHOOSE FROM – STARTUPS & MSMEs 

Summarised table reflecting comparison between Proprietor/OPC/Partnership/LLP/Pvt Limited and Public Limited Company

S.No. Particulars Option 1 Option 2 Option 3 Option 4 Option 5 Option 6
Sole Proprietor One Person Company (OPC) Partnership Firm Private Limited Company Limited Liability Partnership (LLP) Public Limited Company
1. Incorporation Process Complexity Very Easy Medium Easy Medium Medium Medium
2. Minimum No. of Directors NA One NA Two NA Three
3. Minimum No. of Shareholders One One Two Two Two Seven
4. Minimum Paid Up Capital Required NA One Rupee Onwards One Rupee Onwards One Rupee Onwards One Rupee Onwards One Rupee Onwards
5. Minimum Authorised Capital Required NA RS. 1,00,000/- NA Rs. 1,00,000/- NA Rs. 5,00,000/-
6. Annual Compliance Complexity Low Medium Low High Medium Very High
7. Taxation (FY 2017-18) Slab Based 30% plus Cess (if any) 30% plus Cess 25%1/29%2/30% plus Cess plus SC (7%3/12%4) depending upon Turnover and Taxable Income 30% plus Cess (No DDT to be paid) Same as Private Limited Company
8. Statutory Audit N.A. Mandatory N.A. Mandatory Mandatory if Turnover is Rs. 40   Lakhs or contribution is Rs. 25 Lakhs (However partners can file self declaration) Mandatory
9. Annual Return NA To be Filed (Not Mandatory through CS) NA To be Filed To be Filed To be Filed
10. Mandatory Tax Audit (FY16-17) If Turnover > 1 crore for Businesses

If Receipts more than Rs. 50 lakhs

Audit Report to be furnished (Form 3CA and Form 3CD) If Turnover > 1 crore for Businesses

If Receipts more than Rs. 50 lakhs

Audit Report to be furnished (Form 3CA and Form 3CD) If accounts audited under any other act then Audit Report to be furnished (Form 3CA and Form 3CD) Audit Report to be furnished (Form 3CA and Form 3CD)
11. Presumptive Scheme (FY16-17) i.e. No Audit if defined %age of Turnover shown as profits or whose total income does not exceed the maximum amount which is not chargeable to income tax Can be Applied, If Turnover upto Rs. 2 crore for businesses and upto Rs. 50 Lakhs for Professionals Not Allowed Can be Applied, If Turnover upto Rs. 2 crore for businesses and upto Rs. 50 Lakhs for Professionals Not Allowed Not Allowed Not Allowed
12. Income Tax Return Same as Individual Return Separate Return of Owner and OPC Separate Return for Partners and Partnership Firm Separate Return Separate Return Separate Return
13. Liability Unlimited Limited Unlimited Limited Limited Limited
14. Board Meeting NA If more than One Director – Once in Half Year ( Twice in Calendar Year) NA To be Done (Few exemptions for Small Company)5 As per Partners To be Done
15. Annual General Meeting NA Pass Resolution only as only One Member NA To be Done NA To be Done
16. Incorporation Costing (Tentative including Basic Govt. Fee) ~Rs. 2000 ~Rs. 10,000/- ~Rs. 4000/- ~Rs. 15,000/- ~Rs. 12000/- ~Rs. 40,000
17. Annual Compliances Complexity Low Medium Low High Medium High
18. Other Important Points If Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the last three years exceeds Rs.2 Crores, then the OPC has to apply for conversion in to a Private or Public Company. Otherwise also OPC, cant convert for 2 years from date of incorporation.

 

  1. Manufacturing Company  registered after March 01, 2016 and does not claim any tax incentives
  2. Turnover/gross receipts upto Rs. 50 crores
  3. Taxable Income more than 1 crore
  4. Taxable Income more than 10 crores
  5. Small Company is a company having paid up capital upto Rs. 50 lakhs and Turnover during previous financial year below Rs. 2 crores.

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July 28, 2017