Comparisons in Proprietorship vs. Partnership vs. LLP vs. Private Limited Company vs. OPC

If you are new to business and unable to decide whether to be a sole proprietor or in partnership or be in partnership but with limited liability or opt to start as a private company or be the one person company with all the advantage of private company, then it is better to have a quick glance at each of the five concepts and the difference between them. The decision must be taken keeping in mind the investment, size of business, no. of members and the risk taking ability of the promoter. Below is the list of differences between Proprietorship, Partnership, LLP, Private Limited Company and OPC are as follow:

Particulars	Proprietorship	Partnership	Limited Liability Partnership	Private Limited Company	One Person Company
Registration	No formal registration for Proprietorship	-Registration is optional.   -Registered under Partnership Act, 1932	-Registered with Ministry of Corporate Affairs.   -Registered under Partnership Act, 2008.	-Registered with Ministry of Corporate Affairs.   -Registered under Companies Act, 2013	-Registered with Ministry of Corporate Affairs   -Registered under Companies Act, 2013
Name of the Entity	-Owners choice of names can be named.   -No approval is required	-Owners choice of names can be named.   -No approval is required.	-Name must not be illegal, offensive, identical or similar to existing company or registered trademark.   -Suffix Limited Liability partnership to be used    -Name must be approved by registrar of Company.	Name must not be illegal, offensive, identical or similar to existing company or registered trademark.   -Suffix Private limited Company to be used    -Name must be approved by registrar of Company.	Name must not be illegal, offensive, identical or similar to existing company or registered trademark.   -Suffix One Person Company to be used    -Name must be approved by registrar of Company.
Legal Status of Entity	Not considered as a separate legal entity	Not considered as a separate legal entity	Considered as a separate legal entity.	Considered as a separate legal entity	Considered as a separate legal entity
Member(s) Liability	-Unlimited liability   -Responsible for all the liabilities of business	Unlimited liability   -Responsible for all the liabilities of partnership	-Limited Liability   -Liable to the extent of shares/amount invested in the LLP	Limited Liability   -Liable to the extent of share capital of the company	Limited Liability   -Liable to the extent of share capital/capital invested in the company
Minimum No. of members	Can have only 1 member	At least 2 person are required	At least 2 person are required	At least 2 person are required	At least 2 person are required  (Director and Nominee Director)
Max no. of Members	Can have only 1 member	Maximum 20 people can be partners	Can have unlimited no. of members	Maximum 200 people can be members.	Maximum 2 people (Director and Nominee Director)
Foreign Ownership	Not allowed	Not allowed	-Approval of Reserve Bank of India (RBI) and Foreign Investment Promotion Board (FIPB) is required by foreigners to invest in LLP.	- Foreign Investment allowed through Automatic Approval route in most sectors.	-Director and nominee Director cannot be foreigners.
Transferability	Not Transferable	Not Transferable	Ownership transferable	Ownership transferable BY share transfer	Ownership transferable
Existence	Existence dependent on the Proprietor	- Existence dependent on the Partners. -Death of a Partner may cause dissolution of business	- Existence Independent on partners. -Voluntary dissolution or company Law Board may cause dissolution of LLP	-Existence independent of Directors or Shareholders. -Voluntary dissolution or dissolution by Regulating Authorities.	-Existence independent of Directors or Nominee Director.   -Voluntary dissolution or dissolution by Regulating Authorities.
Taxation	Taxed as an individual considering the total income of proprietor	Tax rate is 30% on profit plus surcharge and cess as applicable.	Tax rate is 30% on profit plus surcharge and cess as applicable.	Tax rate is 30% on profit plus surcharge and cess as applicable.	Tax rate is 30% on profit plus surcharge and cess as applicable.
Annual Statutory Meetings	Not required	Not required	Not required	Board and Annual General meetings must be conducted periodically.	Not required
Annual Filings	Only Income Tax return must be file with registrar of companies	Only Income Tax return must be file with registrar of companies	In addition to Income Tax return, Annual Statement of Accounts & Solvency and Annual Return need to be file with the registrar of companies.	In addition to Income Tax return, Annual Accounts and Annual Return need to be file with the registrar of companies.	In addition to Income Tax return, Annual Accounts and Annual Return need to be file with the registrar of companies.
Registration Cost	Online companies like legal raasta offers  Registration at an all inclusive price of Rs.6, 000	Online companies like legal raasta offers  Registration at an all inclusive price of Rs.6, 000	Online companies like legal raasta offers  Registration at an all inclusive price of  Rs.8, 000	Online companies like legal raasta offers  Registration at an all inclusive price of Rs.16,000	Online companies like legal raasta offers  Registration at an all inclusive price of Rs.16,000

  

Cost To Start & Operate a Private Limited Company in India

When we think of starting a company, we face a skeptical question of its cost involved. With fear of high cost, we drop the idea and miss the opportunities around. With internet and transparent pricing, more and more business entities are opting for private limited company. We have thrown some light on the cost involved in starting and running a private limited company.

Starting Up

With the new INC -29 Form, the complexity of registration has reduced and one can easily fast track the process of registration in India. The cost of registration too has reduced comparatively. The cost (Government Fee) of registration is Just Rs. 7000 if incorporated with minimum authorized capital i.e.  Rs. 1 lakh.

  You cannot alone file the documents. You have to seek help from professionals such as lawyer and chartered accountant whose charges vary according to expertise and experience. But, you can even get your company incorporated online with reasonable sum of money. Incorporation fees online is much lower starting at Rs, 7000 only.

Hence, the total onetime cost for incorporating a private limited company online (with legal raasta) is Rs. 14, 000 only.

Business Registrations

This requires not just for private limited company but for all the business entities. Every business entity requires some sort of registration number based on the offerings. For E.g. Restaurants provide service to customers and charge service tax for which service tax registration number is required. Shopkeeper sells good and requires VAT registration number. A license is required under Shops & Establishments Act to open a current account, Professional Tax registration if you have employees and much else.

Cost: Expect to spend Rs. 2,000 to Rs. 15,000 per registration, depending upon the type OF business and state. The rates vary across India.

Mandatory Compliances

Once company is incorporated, it has to appoint auditor, minutes of annual meetings, annual filings of the director and company etc.  Same needs to be informed to the Ministry of Corporate affairs. This may involve much time and energy. Companies seek professional help from CS for the same who may charge up to Rs. 30, 000 per year. Online legal companies charge Rs. 15, 000 per year (inclusive of government fees), but rates are usually double when appointing local CS.

Accounting & Auditing

Every business entity has to maintain its books of records irrespective of the fact whether it is LLP, OPC, Public Limited or Private Limited. Hence, the approximate cost per month would be Rs. 2500 which may vary according to entries in book and work load. Private Limited Companies have to get their accounts audited as it is mandated under companies Act, 2013. This will cost around Rs15, 000 for auditing.

Miscellaneous Compliances

In case you change the address of your office, add or remove the director. Such changes need to be informed to Ministry of Corporate Affairs. In small company, per -job basis CS are require rather than hiring for part time or full time . The approximate cost including govt. fee and professional hiring fees would be around Rs. 1500 onwards, depending on the complexity of the job.

In case of Incorporation of Private Limited Company, the unavoidable costs are as follow:

Cost of a Digital Signature Certificate (DSC): Around Rs. 1400

You will need the Digital signature corticated for at least one of the director for the purpose of Incorporation of company. DSC is obtained from any one of the government vendors. Their approximate prices are generally around Rs. 1400 (including the cost of the token), but can be higher. Some of the well-known vendors are eMudhra and Sify.

Professional Fee: Rs. 7000 onwards

During Incorporation process, you might seek the help from professionals such as CA, CS, Lawyer or other legal companies. For E.g. The declaration by shareholders and directors; Memorandum and article of Association and many other such documents need to be signed by the lawyer. Advice regarding the paid up and authorized capital would be required from a company secretary. The charges of such types of fee may vary according to city, state, experience and expertise. Some may charge reasonable while some may charge exorbitant sum of Rs. 1, 00,000 as professional fees .Online companies, like Legalraasta charge a flat Rs. 7000.

Stamp Duty:

Different stamp duty is charged for different amount of authorized capital. The charges also vary as one move from one state to another. For e.g. For minimum capital of Rs. 1 lakh, the stamp duty is, Rs. 7550 in Madhya Pradesh, Rs. 3025 in Kerala and Rs. 1300 in Maharashtra. Hence, the cost vary with authorized capital and the state .The larger the authorized capital, the larger the stamp duty.

Filing Fee:

Starts at Rs. 4600

It include following fees:

INC-29 fees of Rs. 2000,

Memorandum of Association fees of Rs. 2000,

Article of Association fees of Rs. 300 and

INC-7 fees of Rs. 300.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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