Choosing between a LLP, Pvt Ltd or OPC?

Which one to choose between a LLP, Pvt Ltd or OPC? 

We are not going to stress much on the compliance comparative but really wanted to talk about the benefits of choosing between these entities 

Bottom Line :- 

Unless we are running any firm that needs professional/technical expertise ‘partners; to be attesting or signing documents as per law; which is the case for Chartered Accountant firms, Lawyers, Advocates, In some cases Doctors etc who would need to opt for an LLP format we would choose an Pvt Ltd formation for sure due to its recognition and flexibility. Here is why

Lets begin :-

Working Basis:-

• LLP:- Agreement between partners
• Pvt Ltd and (OPC) work on the basis of Memorandum of Association and Articles of Association. 

Ownership:-

• LLP:- Partners
• Pvt Ltd and (OPC) owned by shareholders which can be different from workers, directors etc

Eligibility:-

• LLP:- Minimum Two partners
• Pvt Ltd :- Minimum Two Directors and Two Shareholders
• (OPC) :- Minimum One Directors and One Shareholders, turnover under 2 Crores and capital under 50 Lakhs

Compliance :-

• In Descending order Pvt Ltd, LLP and then OPC.

Liability :-

Liability of negligence etc does not seap in to other partners / directors but as a collective you are responsible if not liable. Fraud or evasion will Pearce through the corporate veil

• For a Pvt Ltd and (OPC) Ownership of stocks are different from the Executioner’s a.k.a Executive Directors in a Pvt Ltd. That gives extreme clarity between investor vs the Doer.  
• For LLP the working partners would always have liability 

Flexibility:- 

FOR A PVT LTD & (OPC) both

• Shares of owners and Dividends for share holders

PVT LTD (ONLY)

• Easier to Raise Capital
• This is the before step to becoming a LTD company
• More tax deductions than others
• Easiest when you are looking for investment since your shares are easily transferable. 
• RBI allows Foreign Direct Investment to Pvt Ltd Companies
• Stock options for employees ESOP, Stock Ownership, dividends etc. Also added benefit for talent pool retention and possible benefits to other contributors 

LLP 

• Partnership agreement is the foundation of this type of the formation so using the agreement lots of flexibility can be achieved

Recognition:-

• PVT Ltd is the most recognised worldwide for just about everything
• LLP is the most popular amongst professional / technical expertise groups
• (OPC) best as a step one when you are working in a small capital of under 50 Lakh and turnover under 2 Crores INR

LAST UPDATE TO INFORMATION : 2020 October

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