Company LLP/OPC Secretarial Services

OPC and Limited Liability Partnership are two different Business Structures governed by two different acts namely Companies Act and Limited Liability Partnership Act respectively. The concept of One Person Company encourages single and enthusiastic entrepreneurs to operate their own venture. However, Limited Liability Partnership requires two persons for incorporation. Here we have compared two important form of business- OPC and LLP.
Do you want to start a new business but have confusion as to what structure of business you should choose? This article might help you to ease your decision.

One Person Company (OPC) means a Company which has only one person as its member. An OPC is effectively a company that has only one shareholder as its member.

A Limited Liability Partnership (LLP) is the form of the business where minimum two members are required and there is no limit on the maximum number of members. The liability of the members of an LLP is limited.

Comparison between OPC and LLP

There are few similarities as well as a few differences between the OPC and Limited Liability Partnership. Let us discuss both here for your better understanding.

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Points of Difference One Person Company Limited Liability Partnership
Applicability The One Person Company is incorporated by the provisions of the Companies Act 2013. The Limited Liablity Partnership is incorporated by the provisions of the Limited Liability Partnership Act 2008.
Registering Authority The registrar of the company (ROC) is the registering authority for the company. The registrar of the LLP is the registering authority for the LLP
Number of members The numbers of members to start a One Person Company is only one. It is necessary to appoint a nominee in case of OPC. The number of members required is two for the incorporation of the LLP, but there is no maximum limit in LLP.
Minimum Capital Earlier minimum paid-up capital requires Rs 1Lakh to start a Company. After the amendment in 2015, there is no minimum capital required for incorporation of OPC. In the case of LLP, no specific minimum paid-up capital required.
Compliances In OPC, the statutory compliances costs are more. It required to maintain compliance as per the Income Tax Act and the Companies Act. In LLP, the statutory compliances costs are less.
penalty on non-compliance Up to 1 lakh Up to 5 lakhs
Audit Requirements For the One Person Company, auditing is must irrespective of the amount of the share capital. When turnover exceeds Rs 40 Lakhs in LLP, the auditing is required or in the case when a capital contribution is above Rs 25 Lakhs.
Conversion The conversion of OPC is allowed to a Private Limited Company after 2 years of incorporation. The conversion of LLP is not allowed in this case.
Inheritance of Entity The OPC also has the separate legal entity but requires the nominee at the time of incorporation. The LLP has the separate legal entity as well as perpetual succession.
Taxation Benefit 1.Wealth tax is charged at 1%, and the surcharge is applicable.2.A loan to the director is taxable.3.No uniformity in the rates of minimum alternative tax. 1.Surcharge and the Wealth-tax are not applicable .2.A loan to partners is not taxable.3.There is uniformity in the rate of minimum alternative tax.
Transferability There is only one shareholder In OPC; therefore, shares are not transferable. However, the transfer of shares can be done after an amendment in AOA. By making a written agreement before the notary public in the case of LLP, the shares can be transferred.
Dissolution The closure is done when the individual company shareholder is not active. NOC is obtained from the creditors before winding up of OPC. The LLP liquidator is appointed to file the copy of the order to Tribunal with the registrar for LLP’s winding up.

Similarities Between One Person Company and Limited Liability Partnership

  • Separate legal entity: Both of them have separate legal entity. That means OPC or LLP is treated as a different individual in the eyes of law. 
  • Benefits on taxes: To the both types of business structures tax benefits are given. The tax benefits would be 30% from the profits.
  • Limited Liability: In case of OPC the Sole owner and in case of LLP, the liabilities of the partners would be limited.
  • Registration Process: Both the types of businesses are required to be registered with the Ministry of Corporate Affairs.