LLP Advantages and Disadvantages: Everything You Need to Know

Difference between Private Limited, LLPs & OPCs

Now that we've introduced the differences between these three types, let's explore their features and registration processes more thoroughly. This will help you determine which one is the most suitable for your business needs.

Private Limited Company: Features

In India, the Private Limited Company stands as the predominant choice for company registration, governed by the Companies Act of 2013 under the jurisdiction of the Ministry of Corporate Affairs (MCA). This structure is favoured by startups and businesses aspiring for growth and stability, owing to its adaptable ownership model and efficient management practices.

Outlined below are some key characteristics of a Private Limited Company:

1. Limited Liability

• Shareholders enjoy limited liability, safeguarding personal assets from business debts.

2. Separate Legal Entity

• Regarded as a distinct legal entity from its shareholders, allowing it to engage in contracts, own assets, and litigate under its name.

3. Ownership

• Owned by shareholders who possess shares in the company, with ownership transfer facilitated through share transactions.

4. Management

• Managed by appointed Directors, while day-to-day operations are overseen by management, with significant decisions often requiring shareholder approval.

5. Shareholders

• Requires a minimum of two shareholders and can accommodate a maximum of 200.

6. Regulation and Compliance

• Governed by the Companies Act and regulated by the Ministry of Corporate Affairs, mandating compliance with annual financial filings, general meetings, and statutory record maintenance.

7. Investment and Funding

• Attracts investment and funding relatively easily due to its defined ownership structure and limited liability feature.

Private Limited Company: Registration in India

The Ministry of Corporate Affairs (MCA) has introduced a streamlined and online process for company incorporation known as Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), comprising two parts: Part A and Part B.

The steps are as follows:

1. Step 1: Apply for DSC

• Obtain a Digital Signature Certificate (DSC) from Certifying Agencies (CAs) with either one or two-year validity.

2. Step 2: Apply for Name Approval

• Apply for name using SPICe+ Part A which facilitates 'Name Reservation' with the provision for two proposed names and one re-submission (RSUB).

Note: While simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is feasible, only one name can be reserved.

3. Step 3: Apply for Company Registration & Other Applications

• Following name approval, apply for Company Registration using SPICe+ Part B, which also includes the application for allotment of Director Identification Number (DIN), Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), etc.

4. Step 4: Apply for a Bank Account

• Open a current account for your company to facilitate seamless financial transactions and business operations.

5. Step 5: File the Commencement of Business Certificate

• Within 180 days of incorporation, file the Commencement of Business Certificate through Form INC-20A, which is a declaration submitted by the Director of the Company to the Registrar of Companies.

Upon approval of the SPICe+ Form, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

The Certificate of Incorporation includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

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Limited Liability Partnerships: Features

A Limited Liability Partnership (LLP) is a business structure that combines features from both traditional partnerships and limited companies. And, LLPs are often favoured by professional services firms, small businesses, and ventures seeking the blend of partnership flexibility and limited liability protection.

Key characteristics of an LLP include:

1. Limited Liability

• Partners in an LLP benefit from limited liability akin to private limited companies.

2. Separate Legal Entity

• An LLP exists as a distinct legal entity from its partners, capable of owning assets, entering contracts, and engaging in legal proceedings independently.

3. Ownership

• Partners own the LLP, with the ownership structure outlined in the LLP agreement. Ownership transfer typically requires consent from other partners.

4. Management

• Managed by partners or a designated management team as specified in the LLP agreement. Decision-making is often collaborative, with each partner having an equal say.

5. Number of Partners

• Requires a minimum of two partners, with no maximum limit.

6. Regulation and Compliance

• Governed by the Limited Liability Partnership Act in India, featuring less stringent regulatory requirements compared to private limited companies. Compliance entails filing annual returns and maintaining statutory records.

7. Flexibility

• Offers enhanced flexibility in internal management and decision-making processes compared to private limited companies.

Limited Liability Partnerships: Registration in India

Establishing a Limited Liability Partnership (LLP) as a legally recognized business structure involves several crucial steps. Here is a brief and comprehensive outline of the LLP registration process.

1. Step 1: Obtain a DSC

• Obtain a Digital Signature Certificate (DSC) from Certifying agencies. To know more about the process, click here.

2. Step 2: Apply for Name Reservation

• Reserve an LLP's name via the LLP-RUN form, overseen by the Central Registration Centre. Up to two names can be proposed.

3. Submit the FiLLiP Form

• Fill out the FiLLiP form and submit it to the Registrar along with the Subscriber sheet and Director's consent (Form DIR-9).

4. Draft & File the LLP Agreement

• File the LLP Agreement using Form 3 on the MCA portal within 30 days of registration.

Upon approval of the FiLLiP Form by the Registrar of Companies (ROC), you will receive the Certificate of Incorporation, which has important details such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and so on.

Example of LLPIN: AAA-1234

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One Person Companies: Features

One Person Companies (OPCs) present a unique business structure where a single individual can establish and manage a company. Combining aspects of a Private Limited Company and the advantages of Sole Proprietorship, OPCs cater to entrepreneurs and business owners who handle all ownership, operation, and management duties themselves.

1. Sole Ownership

• An OPC is solely owned and managed by a single individual, referred to as the sole shareholder or member.

2. Limited Liability

• Like other corporate structures, OPCs offer limited liability protection to the sole owner.

3. Separate Legal Entity

• OPCs are recognized as separate legal entities independent of the sole owner. This legal distinction enables you to enter contracts, own assets, and participate in legal proceedings under your company’s name.

4. Perpetual Succession

• Despite having only one member, OPCs feature perpetual succession. A nominee appointed during incorporation typically assumes control in the absence of the sole member.

By combining limited liability, separate legal entity status, and simplified operations, OPCs emerge as an appealing choice for small businesses and startups led by single entrepreneurs.

One Person Company: Registration in India

Due to their similarities with private limited companies, OPCs also employ SPICe+ for their company registration process.

SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a comprehensive online form introduced by the Ministry of Corporate Affairs (MCA) in India to streamline and simplify the company registration process.

1. Step 1: Apply for DSC

• Obtain a Digital Signature Certificate (DSC) from any Certifying Agencies in India.

2. Step 2: Submit Part A of SPICe+ Form (If filled separately)

• Apply for name approval using Part A of the SPICe+ form, allowing for submission of up to two proposed names and one re-submission.

3. Step 3: Draft the MoA & AoA

• Draft the Memorandum of Association (MoA) and Articles of Association (AoA) detailing the company's objectives and rules.

4. Step 4: Submit Part B of SPICe+ Form

• Submit Part B of the SPICe+ form along with necessary documents, including DSC, MoA, AoA, and declarations. Pay the prescribed fee for registration.

5. Step 5: Appoint a Nominee

• Appoint a nominee director as required by OPC regulations.

6. Step 6: File for the Commencement of Business Certificate

• Within 180 days of incorporation, file for the Commencement of Business Certificate (Form INC-20A) with the Registrar of Companies.

Upon successful approval of the SPICe+ Form, you’ll receive an email notification from the MCA containing the Certificate of Incorporation (COI) and PAN and TAN details of the Company.

The certificate of Incorporation (COI) includes crucial details such as the Company Name, Registration Number (CIN), Date of Incorporation, Registered Office Address, Company Structure, and more.

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For added clarity, check out our curated collection of sample templates, where you can download and customize most of these above-mentioned templates, as required.

Company Registration with Razorpay Rize

Razorpay Rize provides a wide array of services to facilitate an end-to-end streamlined company registration process, all at the lowest fees and without any hidden charges. Explore the different legal structures below to find the one that’s best for your business.

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Our package includes:

• Company Name Registration
• 2 Digital Signature Certificates (DSCs)
• 2 Directors’ Identification Numbers (DINs)
• Certificate of Incorporation(COI)
• MoA & AoA [Applicable for Private Limited Companies and OPCs]
• LLP Agreement [Applicable for LLPs]
• Company PAN & TAN

*Prices and documents can differ based on the company type.

Find Out Which Company Type to Register

If you operate a small business with limited resources, opting for LLP or OPC registration might be more favourable due to lighter compliance requirements. However, for larger businesses with substantial capital needs, registering as a Private Limited Company provides greater flexibility in raising funds. So, before proceeding with the registration of either a Private Limited Company, LLP, or OPC, it is essential to carefully evaluate the following factors.

• Business Nature and Size
• Fundraising Requirements
• Tax Implications
• Personal Liability Protection

Ultimately, the choice between a Private Limited Company, LLP, or OPC structure depends on the unique characteristics of your business, including its nature, size, fundraising requirements, tax implications, and personal liability protection.

Still confused about which company type to register with? We’ve got you covered! Introducing our latest tool - "Know Your Company Type."

For the first time in India, answer a quick set of questions about your startup, and this tool will utilize your responses to identify the perfect company registration type for you. Find your ideal fit with just one click!

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In summary, choosing between Private Limited Companies, OPCs, and LLPs depends on your business goals and preferences. Each structure offers unique benefits, whether it's scalability with Private Limited Companies, convenience with OPCs, or simplicity with LLPs. If you have any unanswered questions or want to get started with the company registration process, feel free to get in touch with us!

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What Does the OPC Registration Fee Include?

The OPC registration fee breakdown generally comprises the following components:

• Government Filing Fees: Charges for submitting incorporation forms and other mandatory filings.
• Professional Service Charges: Fees for hiring professionals like Chartered Accountants or Company Secretaries assist with registration.
• Miscellaneous Costs: Additional expenses such as document preparation, notarisation, and obtaining licenses, if required.

OPC Registration Fees Breakdown

The OPC registration cost can be divided into several components:

Government Fees

• Cost for filing the SPICe+ form and other mandatory forms on the MCA portal.
• Cost of obtaining DSC for the Director.
• Fees for obtaining the DIN
• Depends on the authorised capital of the company; higher authorised capital attracts higher fees.

Professional Service Charges

Fees for professional assistance in preparing documents, filing forms, and ensuring compliance. It varies based on the service provider and location.

Stamp Duty Fees

Stamp duty is state-specific and varies based on the authorised capital and the location of its registered office. On average, stamp duty can range from ₹500 to ₹5,000.

Name Reservation Fees

Reserving a unique name for your OPC costs ₹1000 per application. This step ensures your chosen name complies with MCA guidelines.

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Miscellaneous Expenses

Charges for notarisation and other incidental expenses.

How Much Does OPC Registration Cost?

The overall cost of OPC registration in India typically ranges between INR 5,000 and INR 20,000, depending on various factors like professional service fees, authorised capital, and location. Government fees generally constitute a significant portion of the total cost.

Factors Affecting OPC Registration Fees

There are several factors affecting the OPC fees. Some of the OPC registration cost factors include- 

1. Authorised Capital: Higher authorised capital increases government fees and stamp duty charges.
2. Location: Costs may vary depending on the state due to differences in stamp duty and professional service charges.
3. Choice of Service Provider: The fees charged by professionals or agencies can differ significantly based on their expertise and service offerings.
4. Additional Services: Costs for optional services, such as trademark registration or GST registration, add to the total expense.

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<H2> One Person Company Registration Process

The OPC registration process involves the following key steps:

1. Name Approval:
   
   • Choose a unique name for your OPC and apply for approval through the Ministry of Corporate Affairs (MCA) portal.
2. Obtaining DSC:
   
   • Obtain a Digital Signature Certificate (DSC) for the proposed director.
3. Drafting Memorandum and Articles of Association:
   
   • Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) outlining the company's objectives and rules.
4. Submitting Documents on the MCA Portal:
   
   • Upload the required documents, such as identity proof, address proof, and the nominee's consent, on the MCA portal along with Form SPICe+.
5. Incorporation Certificate:
   
   • Once approved, the MCA issues a Certificate of Incorporation, marking the completion of the registration process.

Frequently Asked Questions

Limited Liability Partnership (LLP)

An LLP is a hybrid business structure that combines the benefits of a company (limited liability) with the flexibility of a partnership. Some key features include:

• Minimum two partners required
• Liability of partners is limited to their contribution
• No minimum capital requirement
• Fewer compliance requirements than a company
• Separate legal identity from its partners

One Person Company (OPC)

Introduced under the Companies Act, 2013, an OPC allows a single individual to operate a corporate entity. It offers:

• Limited liability
• Separate legal identity
• Easier fundraising compared to a sole proprietorship
• Greater credibility in business dealings

However, OPCs face limitations like:

• Restrictions on fundraising
• Mandatory conversion if turnover exceeds ₹2 crore or capital exceeds ₹50 lakh
• Cannot have more than one member

Conversion of OPC to LLP

OPC conversion to LLP is governed by the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. While direct provisions for OPC-to-LLP conversion are not explicitly provided, companies (including OPCs) can be converted into LLPs under Section 366 of the Companies Act and the Second Schedule of the LLP Act.

Understanding the Legal Provisions for Conversion of OPC to LLP

The legal path for converting an OPC to an LLP involves:

• Section 366 of the Companies Act, 2013 (deals with companies being converted into LLPs)
• Second Schedule of the LLP Act, 2008 (provides the procedure for such conversions)
• Form FiLLiP and Form 18 under the LLP Rules, 2009

Note: Prior approval from the Registrar of Companies (ROC) is mandatory.

Related Read: ROC Compliance Calendar for 2025–2026

Eligibility Conditions and Compliance Steps for Conversion

To be eligible for conversion:

• Before conversion, the OPC must have at least two shareholders (LLPs require a minimum of two partners).
• No active defaults in filing annual returns, income tax, or other statutory dues.
• All secured creditors (if any) must give their consent.
• The company should not have applied for winding up or struck-off status.

Compliance steps include:

1. Holding a Board Meeting and passing a resolution for conversion
2. Increasing the number of members/directors to meet LLP requirements
3. Obtaining name approval through RUN–LLP or FiLLiP form
4. Filing Form FiLLiP and Form 18 with ROC
5. Executing an LLP Agreement within 30 days of incorporation

Looking to switch from OPC to LLP? Get professional help for a smooth and compliant business conversion with Razorpay Rize's LLP Registration Service.

Documents Furnished along with Form 18

Form 18 is the declaration for conversion and must be supported with:

• Board resolution for conversion
• Consent of all shareholders
• Statement of assets and liabilities certified by a CA
• List of creditors and their consent
• Latest income tax return acknowledgement
• Copy of PAN card and Aadhaar of all proposed partners
• Address proof of the registered office of the LLP
• NOC from the property owner (if rented office)

Procedure for Conversion of OPC to LLP

Here’s a step-by-step breakdown:

1. Board Resolution: Approve the conversion plan and authorise directors to file the necessary forms.
   
   
2. Increase Number of Members: Since an LLP requires at least two partners, the OPC must first induct another shareholder.
   
   
3. DIN & DSC: Ensure all partners have a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
   
   
4. Name Approval: Apply for name reservation using RUN–LLP or through FiLLiP.
   
   
5. Form FiLLiP Filing: File FiLLiP with ROC for incorporating the LLP.
   
   
6. Attach Form 18: While filing FiLLiP, attach Form 18 with the required documents.
   
   
7. Certificate of Incorporation: On approval, the ROC will issue a Certificate of Incorporation for the LLP.
   
   
8. Execute LLP Agreement: Draft and file the LLP Agreement within 30 days.
   
   
9. Apply for PAN, TAN & GST: Update statutory registrations with new LLP details.
   
   
10. Close OPC Bank Account & Update Records: Close existing bank accounts of OPC and update stakeholders.

Frequently Asked Questions (FAQs)