Your business structure shapes the next several years: your personal liability, the tax you pay, whether an investor can come in, and how much compliance you carry. Most Indian founders weigh three options: the private limited company (Pvt Ltd), the limited liability partnership (LLP) and the one person company (OPC). If you are still deciding whether to incorporate at all, see sole proprietorship vs private limited company.
This guide compares them on the six things that decide the outcome, corrects three rules that are still widely misquoted (OPC conversion, FDI in an LLP and the LLP late fee), and ends with a step-by-step way to choose. If you have narrowed it to two, our LLP vs private limited company guide goes deeper on that pair. For every structure we register, see company registration.
Quick comparison
| Feature | Pvt Ltd | LLP | OPC |
|---|---|---|---|
| Law | Companies Act, 2013, s.2(68) | LLP Act, 2008 | Companies Act, 2013, s.2(62) |
| Minimum owners | 2 shareholders and 2 directors | 2 partners, 2 designated partners | 1 member plus 1 nominee |
| Maximum owners | 200 shareholders | No limit | 1 member |
| Liability | Limited to shares | Limited to contribution | Limited to shares |
| Equity funding and ESOPs | Yes | No shares to issue | Not without converting |
| FDI | Allowed, subject to sector rules | Allowed, conditionally | Not possible: the member must be an Indian citizen |
| Tax (FY 2025-26) | 22%, 25% or 30%, plus surcharge and cess | 30%, plus surcharge and cess | Same as a Pvt Ltd |
| Statutory audit | Every year | Only above ₹40 lakh turnover or ₹25 lakh contribution | Every year |
| Annual MCA filings | AOC-4 and MGT-7 (MGT-7A if a small company) | Form 11 and Form 8 | AOC-4 and MGT-7A |
| Registration form | SPICe+ | FiLLiP | SPICe+ |
| Compulsory conversion | None | None | None since 1 April 2021 |
| Best for | Startups, investor-backed and scaling businesses | Professionals, services, family businesses | Solo founders |
What each structure is, in one paragraph each
Private limited company. A private company under section 2(68) of the Companies Act, 2013: its articles restrict the transfer of shares, cap members at 200 and bar any invitation to the public to subscribe. It is a separate legal entity with perpetual succession and is the default for businesses that want outside capital. See private limited company registration.
LLP. A body corporate under the LLP Act, 2008 that combines a partnership's flexibility with limited liability. The LLP agreement sets out contributions, profit sharing and how the partners run it. At least two designated partners are needed, one resident in India. See LLP registration.
OPC. A company with a single member under section 2(62). The member must name a nominee: the person who takes over membership if the sole member dies or becomes incapable of contracting. Both must be Indian citizens. See one person company registration.
Why a sole proprietorship is not on this list
A sole proprietorship is the cheapest and simplest way to trade, but it has no limited liability and no separate legal identity: the founder and the business are the same person in law. For anything you intend to grow or fund, it is rarely the right call. It is mentioned here only so you can rule it out with confidence.
The six dimensions that decide it
1. Fundraising: equity shares, CCDs, SAFEs and ESOPs
A Pvt Ltd can issue equity shares, compulsorily convertible debentures (CCDs), SAFE-style instruments and ESOPs, which is everything an angel or VC round uses. An LLP has partner contributions and profit shares, not shares, so equity investors do not come in. An OPC has one member by definition, so it must convert before it can take an investor.
Verdict: if raising equity is anywhere on your roadmap, a Pvt Ltd is the only realistic option. Our ESOP scheme drafting service sets up the pool once you are ready.
2. Limited liability: effectively equal
In a Pvt Ltd or OPC, liability is limited to the share capital; in an LLP, to the agreed contribution, and one partner is not liable for another's misconduct. Verdict: any of the three ring-fences your personal assets.
3. Tax: rate, dividends and pass-through
For FY 2025-26 (AY 2026-27) the Income-tax Act, 1961 applies. A Pvt Ltd or OPC pays 25% where turnover in FY 2023-24 did not exceed ₹400 crore, otherwise 30%, or can opt for 22% under section 115BAA and give up certain deductions, with surcharge and 4% cess on top. An LLP pays 30%, a 12% surcharge above ₹1 crore of income, and 4% cess.
The second layer matters as much as the rate. Dividend distribution tax has been abolished, so dividends are taxed in the shareholder's hands. A partner's share of LLP profit is exempt in the partner's hands, so profit passes through without a second layer of tax.
Verdict: a company that retains and reinvests profit usually does better on the lower headline rate; a business that distributes most of its profit may find the LLP simpler. The best rate depends on whether you distribute or reinvest.
From Tax Year 2026-27 the Income-tax Act, 2025 applies (in force since 1 April 2026), and the 22% option continues under section 200 of the new Act. For the full company position see private limited company tax rate for AY 2026-27.
4. Compliance: what each one actually files
- Pvt Ltd: AOC-4 and MGT-7 every year through annual ROC filing, a statutory audit whatever the turnover, an AGM, statutory registers and at least four board meetings a year. A small company, one with paid-up capital up to ₹10 crore and turnover up to ₹100 crore (G.S.R. 880(E), 1 December 2025), files the shorter MGT-7A and needs only one board meeting in each half of the calendar year.
- OPC: AOC-4 and MGT-7A, a statutory audit every year, no AGM, and board meetings only if it has two or more directors.
- LLP: Form 11 (annual return) by 30 May and Form 8 (accounts and solvency) by 30 October, even with nil business. No board meetings or AGM. Audit only above the thresholds.
- All three: each director or designated partner files director KYC (DIR-3 KYC) once every three financial years by 30 June (G.S.R. 943(E), effective 31 March 2026). The next date is 30 June 2028 for those already compliant. The fee is nil on time, ₹5,000 late and ₹500 for a change filing (G.S.R. 300(E), 21 April 2026).
Verdict: the LLP is the lightest, the OPC sits in the middle, the Pvt Ltd is the heaviest.
5. Setup cost and how easy it is to change later
Setup cost is similar across the three. For a Pvt Ltd or OPC, the MCA incorporation fee on SPICe+ is nil up to ₹15 lakh authorised capital, with stamp duty at actuals by state; the name fee, DSCs and PAN and TAN are separate. Regikart's professional fee starts from ₹1,499 for each. The long-term difference is recurring compliance, which rises in this order: proprietorship, partnership, LLP, OPC, Pvt Ltd, public limited. The line-by-line setup cost is in private limited company incorporation cost.
Verdict: if there is any realistic chance you will raise equity, incorporating as a Pvt Ltd avoids a conversion later.
6. Credibility with investors, banks and hires
A Pvt Ltd is the structure investors, banks, large clients and ESOP-eligible hires recognise most readily. An LLP is well understood in professional services. An OPC is fully legitimate, but the one-person framing can read as early-stage to larger counterparties.
FDI: what each structure can take
- Pvt Ltd: foreign investment is allowed within the sector's cap and route, and each allotment to a foreign investor is reported to the RBI.
- LLP: FDI is allowed, conditionally. It is permitted under the automatic route only where the sector allows 100% FDI on the automatic route and carries no FDI-linked performance conditions (paragraph 3.2.4 of the Consolidated FDI Policy). The common claim that FDI is not allowed in an LLP is wrong.
- OPC: not possible, because the only member must be an Indian citizen.
Our FDI reporting team handles the filings on either route.
Audit: who must be audited and when
A Pvt Ltd and an OPC need a statutory audit every year, whatever the turnover. An LLP needs one only if its turnover exceeds ₹40 lakh or its partners' contribution exceeds ₹25 lakh; below both, the designated partners certify the accounts. A tax audit under the Income-tax Act is a separate test that can apply to any of the three.
Conversion, and what changed in 2021
Until 31 March 2021 an OPC had to convert into a private company once its paid-up capital exceeded ₹50 lakh or its average turnover exceeded ₹2 crore. That rule was removed with effect from 1 April 2021 by the amendment to Rules 3 and 6 of the Companies (Incorporation) Rules, 2014. An OPC can now grow to any size and stay an OPC. Many older articles still quote the old limits.
OPC to private limited: Form INC-6
An OPC converts only when the owner chooses, and it can do so at any time. It adds at least one more member and director, passes a special resolution, alters its memorandum and articles, and files Form INC-6.
LLP to private limited: section 366
An LLP can convert into a private limited company under section 366 of the Companies Act, 2013. It is well trodden but adds time and cost, usually at the point you are trying to close a round. Our company and LLP conversion guide sets out both directions.
Late filing: the real numbers
- Pvt Ltd and OPC: a late AOC-4, MGT-7 or MGT-7A carries an additional fee of ₹100 per day per form, with no upper limit. A late annual return also exposes the company and officers to a separate penalty under section 92 of ₹10,000 plus ₹100 per day of continuing default. The fee and the penalty are different things, and both can apply.
- LLP: since 1 April 2022 a late Form 8 or Form 11 carries an additional fee that is a multiple of the form's normal fee, rising with the delay: from 1 time up to 15 times for a small LLP and up to 30 times for any other LLP, plus a per-day amount once the delay passes 360 days. It is not ₹100 a day. The ₹100 a day figure is the separate penalty that can be adjudicated under sections 34(5) and 35(2) of the LLP Act, capped at ₹1,00,000 for the LLP and ₹50,000 for each designated partner.
How to choose, step by step
- Count your founders. One founder points to an OPC; two or more open all three.
- Decide on outside funding. If you will raise equity or grant ESOPs, choose a Pvt Ltd.
- Weigh the compliance you can carry. If you want the lightest load and no funding, an LLP.
- Think about credibility. A Pvt Ltd carries the most weight with banks, clients and hires.
- Plan for growth. A solo founder expecting to add investors can start as an OPC and convert whenever ready.
- Match the form. SPICe+ for a Pvt Ltd or OPC, FiLLiP for an LLP.
| Your situation | Best fit |
|---|---|
| Raising angel or VC funding | Pvt Ltd |
| Plan to offer ESOPs | Pvt Ltd |
| Two professionals, low compliance, self-funded | LLP |
| Solo founder, limited liability, no investors yet | OPC |
| Foreign co-founder or investor | Pvt Ltd, or an LLP in an eligible sector |
Which form registers which
A Pvt Ltd and an OPC are both incorporated through SPICe+ on the MCA portal, with Part A for the name and Part B for incorporation, PAN and TAN, usually in 7 to 15 working days. An LLP is incorporated through FiLLiP after a RUN-LLP name reservation, and the LLP agreement is then filed in Form 3 within 30 days. For the company route in detail, see how to register a private limited company and the wider company registration guide.
Key takeaways
- Only a Pvt Ltd can issue equity shares, CCDs and ESOPs, so a funding plan narrows the choice to it.
- An LLP has the lightest compliance and is audited only above ₹40 lakh turnover or ₹25 lakh contribution.
- An OPC has had no compulsory conversion since 1 April 2021 and can convert voluntarily through Form INC-6 at any time.
- FDI in an LLP is allowed on the automatic route in eligible sectors; an OPC cannot take FDI.
- A late LLP form costs a multiple of its normal fee, not ₹100 a day; a late company form costs ₹100 a day per form.
Talk to Regikart
Still unsure which structure fits? Regikart's CA and CS team models the tax and compliance for each option against your plans, then registers the one you choose. We work with 250+ clients from offices in Kolkata (head office), Delhi and Bengaluru. Call or WhatsApp +91 70444 94804, or contact us.
Frequently asked questions
Which is better, a private limited company or an LLP?
A Pvt Ltd if you plan to raise equity, grant ESOPs or want maximum credibility. An LLP if you want limited liability with lighter compliance and will fund the business yourself.
Must I convert my OPC to a private limited company once it grows?
No. The compulsory conversion at ₹50 lakh paid-up capital or ₹2 crore turnover was removed from 1 April 2021. An OPC converts only when the owner chooses, by adding a member and a director, passing a special resolution and filing Form INC-6.
OPC ko Pvt Ltd mein kab convert karna padta hai?
Kabhi compulsory nahi. 1 April 2021 se turnover ya capital ki koi limit nahi hai. Jab aap investor ya co-founder laana chahein, tab Form INC-6 file karke convert kar sakte hain.
Is FDI allowed in an LLP?
Yes, conditionally. FDI in an LLP is allowed under the automatic route where the sector permits 100% FDI on the automatic route with no FDI-linked performance conditions.
Can an LLP raise venture capital?
Generally no. Venture funds invest in equity shares, which an LLP cannot issue. Most LLPs convert to a Pvt Ltd under section 366 before raising institutional money.
What is the late fee if an LLP files Form 11 or Form 8 late?
An additional fee that is a multiple of the form's normal fee, from 1 time up to 15 times for a small LLP and up to 30 times otherwise, rising with the delay, plus a per-day amount beyond 360 days. It is not a flat ₹100 a day.
Do all three need an audit?
A Pvt Ltd and an OPC are audited every year. An LLP only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh.
Is an OPC taxed differently from a private limited company?
No. An OPC is taxed as a company, including the 22% option under section 115BAA for FY 2025-26, which continues under section 200 of the Income-tax Act, 2025 from Tax Year 2026-27.
Which annual return does an OPC file?
MGT-7A, the abridged annual return for OPCs and small companies, along with AOC-4 for its financial statements.
How many people are needed for each structure?
A Pvt Ltd needs at least two shareholders and two directors, an LLP at least two designated partners, and an OPC one member who is also usually the director, plus a nominee.
Can a foreign national be a director?
Yes, in a Pvt Ltd, provided at least one director stayed in India for 182 days or more during the financial year and the FDI rules for the sector are followed.
About the author
Regikart CS Team
Company Secretaries at Regikart. Want to discuss this in the context of your business?
