What are the Differences between Limited Liability Partnership & One Person Company?
The two forms Limited Liability Partnership and One Person company are relatively new to the Indian Businesses. There are many differences in the structure of both the forms. We have categorized these Differences between Limited Liability Partnership & One Person Company under certain parameters as listed below :
1. Governing Law
A Limited Liability Partnership is governed by Limited Liability Partnership Act, 2008 on the other hand a One Person Company is governed by Companies Act, 2013
2. Name Suffix
Letters “LLP” are suffixed to the name of a Limited Liability Partnership and letters “OPC” are suffixed to One Person Company
3. Recommended for
The form Limited Liability Partnership is recommended for Professional like Chartered Accountants, Company Secretaries, Architects, Lawyers etc. The form One Person Company is recommended for Single Promoters and not a group of people.
4. Legal Alternative form for
Limited Liability Partnership is sometimes considered to be a legal alternative to a General Partnership. One Person Company is considered to be a legal alternative to sole proprietorship.
5. Fines & Penalties
In the case of Limited Liability Partnership the fines and penalties imposed by the governing law is higher than that of One Person Company
6. Minimum Designated Partners/ Person required
Minimum number of designated partners required in the case of a Limited Liability Partnership is 2 however as discussed above in case of a One Person Company only 1 person is required another one could be a nominee.
Audit is not compulsory in the case of Limited Liability Partnership. It is required only when the turnover exceeds Rs. 40 lakhs or capital contribution exceeds Rs. 25 lakhs. In the case of One Person Company an audit is compulsory.
It is difficult to raise funds in case of Limited Liability Partnership as it cannot raise funds from Public but it is not possible to raise funds in case of a One Person Company
A Limited Liability Partnership cannot be converted into a Public Limited, Private Limited or One Person Company but a One Person Company can be converted into a Public Limited or Private Limited company.
One person company is a suitable alternative for businesses owned and operated by single person and Limited Liability suits more for professionals. Please see the nature of your business and your requirements for choosing an entity form out of the above.
Hope you have liked our article on " What are the Differences between Limited Liability Partnership & One Person Company?". Let us know what you think in the comment section below. For more information you can visit www.registrationsindia.com
Let us know your Registration, Taxation & Compliance Requirements