Private Limited vs. Limited vs. LLP vs. One Person Company

Before commencing business, imperative to know its each aspect like cost of commencing business, challenges in business, national & international market scenario, hiring manpower for business, business infrastructure, and legal services for business like trademark registration, Company Registration, OPC Registration, LLP Registration etc. According to expertise and interest there are many options to start a company as LLP, One Person Company, Limited Company and Private Limited. But, do you know the difference between these four, through this blog we will shed light on difference between Private Limited company, Limited company, LLP, and One Person Company.

Limited Company: Meaning and Features

Limited company is a type of business wherein assets and income of owner are separate and distinct from assets and incomeof company. The number of members in a limited company must be seven. Across the world, limited companies are abbreviated as PLC, LLC, AG, etc. In India some popular limited companies are Reliance Industries Ltd, Tata Consultancy Services Ltd, HDFC Bank Ltd, Infosys Ltd, etc. In In the United States, a limited company is commonly known as a corporation (Corp.) or as incorporated (Inc.) and in country like Germanya limited company is commonly known as (AG).

• A Limited Company operates with substantial working capital and its share is promoted in the open market thereby limited companies are credible, gets many investors that enhances the cash flow of the company.
• Shares of limited companies listed on hedge funds, mutual funds, etc.
• Since limited companies operate from public taxes therefore lesser amount of risk and large volumes of money can be invested comfortably.
• In the context of business law, a Ltd company is a different legal entity from the owner thereby the company is credible for the monitoring and control of its fixed assets, liabilities, creditors, and debtors.

Private Limited Company: Meaning and Features

A Private Limited Company is a type of business wherein assets and income of owner are not separated. In this type of business, owners have complete authority on company's assets and earning. Minimum number of members in a private limited company must be two but should not exceed than fifty. In India some popular private limited companies are Google India Pvt. Ltd., American Express (India) Private Limited, Sap Labs India Private Limited, Microsoft Corporation (India) Private Limited, PayPal Payments Private Limited, etc.

• A Private Limited Company operates with limited working capital and its share is not promoted in the open market.
• After the implementation of Company Act 2013, any individual can verify the metadata of the company visiting the MCA portal.
• Its shares cannot be traded or exchanged on public exchanges.
• Entrepreneurs prefer to register their start-ups as private limited company and according to condition of any private limited company, the proprietors of the company not allowed to raise funds via equity. This inhibits the growth prospects and increases the liabilities.

LLP: Meaning and Features

LLP is an alternate form of business that that provides the benefits of a partnership firm and a company. It is a hybrid between a company and a partnership firm wherein partners only have to bear losses to the extent of their actual contribution to the business, and nothing beyond that.In case of business losses or bankruptcy, there is no loss in partners' personal assets. LLP exist in many countries in professional businesses like law firms, accounting firms, medical practices, and wealth managers.

• LLPs offer flexibility in management structure and decision-making processes, allowing partners to define roles and responsibilities based on their agreement.
• Compared to corporations, LLPs usually have fewer compliance requirements in terms of meetings, resolutions, and filings.
• Like partnerships, LLPs generally have pass-through taxation, where profits and losses pass through to the individual partners, who report them on their personal tax returns. The LLP itself is not taxed on its profits.

One Person Company: Meaning and Features

One Person Company (OPC) is a form of business that allows a single individual to establish a company with limited liability. It is a legal entity where a sole entrepreneur owns a company without the need for additional shareholders or directors.

• Owner's liability is restricted to the extent of their investment in the company. In this form of business, there is no harm of personal assets of owner in case of business losses or bankrupt.
• OPCs are required to nominate a director (usually someone trusted) who can takes over the company, in case the sole owner becomes incapacitated or deceased. This ensures continuity and legal compliance.
• There is no mandatory minimum capital requirement for starting an OPC, allowing flexibility in the amount of capital invested to start the business.
• With the growth of the business an OPC can be converted into a private limited company.
• OPCs have specific annual compliance requirements, including filing financial statements, annual returns, and other statutory documents with the Registrar of Companies.

There is a lot of effort and great vision required to start a company and make it successful. Legal services for business are crucial for business success for this hiring business lawyers from top law firm is advisable. Global Jurix is a top law firm in India reputed for its excellent legal services for business.

Read Also:
Five Benefits of Company Registration for Small Businesses and Startups
Five Significant Advantages of Trademark Registration for Startups
Major Benefits of Starting a Business in India for Foreign Entrepreneurs

Global Jurix
S-191 C, 3rd floor, Manak Complex
School Block, Shakarpur
New Delhi - 110092, India
Call at +91-98100-62387
Mail at: corporate@globaljurix.com