LLP or Partnership Firm or Private Limited Company

Comparison Between Business Structures

Sole Proprietorship Vs Partnership Firm Vs OPC Vs LLP Vs Private Limited Company

Parameter

Sole Proprietorship

Partnership

One Person Company (OPC)

Limited Liability Partnership (LLP)

Private Limited Company

Statute

Common Law

Common Law – unregistered

Indian Partnership Act, 1932- registered

Companies Act, 2013

Limited Liability Partnership Act, 2008

Companies Act, 2013

Ownership

The Proprietor- an individual

Minimum 2 partners (a company can be a partner)

Division of Labour-

O/ship- Promoter (only one)

Daily working- Board of Director(s) (OPC may have more than 1 director)

Division of Labour-

O/ship- All partners

Daily working- Designated Partners

Division of Labour-

O/ship- Promoters and shareholders

Daily working- Board of Directors (at least 2 directors)

Legal identity & Liability

No distinct PAN.

No separate legal entity. Proprietor to bear all liabilities.

 

Distinct PAN.

No separate legal entity from its partners. Private assets of the partners can be used to meet the liabilities of the firm in case firm's assets are not adequate to meet its liabilities.

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Funding

Owned funds. Difficult for bank loans. Collateral of personal assets.

Owned funds. Difficult for bank loans. Collateral of personal assets.

Owned funds or debt. Cannot raise or offer equity

Owned funds. Debt funds can be managed.

For startups, Investors do not like to invest in this type of business entity

Best option if looking for business expansion I long run. Both Debt and Equity permitted. 

Costs:

  

Incorporation

NIL

Very minimal.

If registered, then cost for registration. May go upto 10000/-

Presently greatly reduced. CG charges- NIL upto 15 Lakhs

Stamp Duty payable to State Governments ranging from 200/- to 10000/-

Very minimal.

Presently greatly reduced. CG charges- NIL upto 15 Lakhs

Stamp Duty payable to State Governments ranging from 200/- to 10000/-

Recurring

Trade license

Trade License

Tax Audit depending on Turnover

Filing of Forms

Auditor Fees

ITR filing fees

Other business registrations

Filing of Forms

Auditor Fees- if Turnover exceeds 40 Lakhs

ITR filing fees

Filing of Forms

Auditor Fees

ITR filing fees

Other business registrations

Taxation

Depends on personal tax slabs

Taxed at 30%. Remuneration

paid to partners can be

claimed as deduction,

restricted to the limits

speci‑ed (under the IT Act).

MAT does not apply.

No general advantages

(industry specific advantages are available). Tax to be paid at flat rate of 30% on profits, Dividend taxable in hand of receiver.

Minimum

Alternate Tax (MAT) applicable

No general advantages

(industry specific advantages are available). Tax to be paid at flat rate of 30% on profits. MAT is applicable.

Taxes on Income The following rates are applicable to the domestic companies for AY 2020-21 based on their turnover (excluding cess & surcharge): 

 

Sections

Tax rate

Surcharge

Section 115BA (Applicable Manufacturing Domestic Companies

25%

7%/12%*

Section 115BAA (applicable domestic companies)

22%

10%

Section 115BAB (manufacturing)

15%

10%

Any other case

30%

7%/12%*

Dividend taxable in hand of receiver. Minimum

Alternate Tax (MAT) applicable

Going Concern

Not survive if proprietor departs

Departure of any partner brings it to an end

Nominee is mandatory to be appointed. It will continue

It will continue even if a partner departs

It will continue as it has perpetual succession.