Comparison between different forms of Entities:
| Criteria | Proprietorship | Partnership | Limited Liability Partnership (LLP) | Private Limited Company | One Person Company (OPC) |
| Minimum Number of Members | One | Two | Two | Two | One |
| Maximum Number of Members | One | 20 | No limit | 200 | One |
| Liability of Members | Unlimited | Unlimited | Limited | Limited | Limited |
| Separate Legal Entity | No | No | Yes | Yes | Yes |
| Statutory Compliances | Minimal | Moderate | Moderate | High | High |
| Transferability of Ownership | N/A | No | No | Yes | Restricted |
| Annual Filing Requirements | Minimal | Moderate | Moderate | High | High |
| Taxation | Individual tax rates | 30% of Profits | 30% of Profit Plus CESS and Surcharges applicable | 25% of Profit Plus CESS and Surcharges applicable* | 25% of Profit Plus CESS and Surcharges applicable* |
| Audit Requirement | Mandatory if turnover exceeds prescribed limits | Mandatory if turnover exceeds prescribed limits | Mandatory if turnover exceeds prescribed limits | Mandatory | Mandatory |
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Conclusion:
Proprietorship: Simplest and easiest to set up but offers no limited liability.
Partnership: Easy to form with shared liability among partners. Registration is not mandatory but advisable.
LLP (Limited Liability Partnership): Combines the simplicity of a partnership with limited liability. Mandatory registration and compliance.
Private Limited Company: Offers limited liability with more complex compliance and registration processes. Suitable for medium to large-sized businesses. For Startups looking for investors this will be best.
One Person Company (OPC): Allows single entrepreneurs to enjoy limited liability with more regulatory compliance compared to a proprietorship. Consider your business objectives, risk tolerance, and long-term goals when choosing the most suitable business structure. Consulting with legal and financial advisors is recommended for making an informed decision. Get your free consultation with us.
