Business Registration
Pvt Ltd vs LLP vs OPC vs Proprietorship — Which Business Structure is Right for You?
A founder-friendly comparison of Private Limited Company, LLP, OPC and Sole Proprietorship in India — taxation, compliance burden, fundraising, and personal liability.
FilingBase Team25 May 2026 2 min read
Choosing the right business structure is one of the highest-leverage decisions a founder makes — it shapes your taxes, compliance burden, fundraising path and personal liability for years. Here's the founder-friendly breakdown for India in 2026.
The four most common structures
| Structure | Min owners | Liability | Best for |
|---|---|---|---|
| Sole Proprietorship | 1 | Unlimited | Freelancers, solo consultants, very small traders |
| One Person Company (OPC) | 1 director | Limited | Solo founders wanting corporate status |
| LLP | 2 partners | Limited | Professionals, agencies, small services |
| Private Limited | 2 directors / shareholders | Limited | Startups raising capital, scale-ready businesses |
Side-by-side comparison
1. Setup cost & time
- Proprietorship: ~3–7 days, basically free
- OPC: ~10–12 days
- LLP: ~10–15 days
- Pvt Ltd: ~10–15 days
2. Annual compliance
- Proprietorship: nearly none beyond ITR
- OPC / Pvt Ltd: ROC filings (AOC-4, MGT-7), DIR-3 KYC, board meetings, statutory audit if turnover > ₹2 crore
- LLP: Form 8 + Form 11 + ITR; audit if turnover > ₹40 lakh OR capital contribution > ₹25 lakh
3. Taxation (FY 2025–26)
- Proprietorship: taxed at individual slab rates
- OPC / Pvt Ltd: flat 25% (turnover ≤ ₹400 crore) or 22% (new manufacturing) + surcharge & cess
- LLP: flat 30% + surcharge & cess (no DDT, no MAT for small LLPs)
4. Fundraising
- VCs / angels prefer Pvt Ltd because they buy equity shares
- LLPs can raise debt and bring in partners but cannot issue equity
- OPC must convert to Pvt Ltd once turnover > ₹2 crore or paid-up capital > ₹50 lakh
- Proprietorship can only borrow as the individual
5. Personal liability
- Proprietorship: 100% personal — your home/savings can be attached if the business fails
- OPC / LLP / Pvt Ltd: limited liability — your personal assets are shielded (with exceptions like fraud)
Decision tree
- Solo and not raising money? Start as a Proprietorship; upgrade later.
- Solo but want limited liability? OPC.
- 2+ partners, low compliance appetite, no VC plans? LLP.
- 2+ founders, raising or planning to raise capital? Pvt Ltd — it's the only structure VCs invest in.
Pitfalls to avoid
- Choosing Pvt Ltd if you're a single freelancer — annual compliance will outweigh tax savings
- Choosing Proprietorship for a tech startup that plans to raise — converting later is painful
- Forgetting DIR-3 KYC for OPC/Pvt Ltd directors — the DIN gets deactivated and reviving it is a paid headache
- Not aligning MoA object clauses with your actual business — this triggers unnecessary objections during incorporation
Not sure which to pick? Tell us about your business and we'll recommend in a 15-minute call. Get a free consultation →
FAQs
People also ask
LLP is cheaper to maintain. Pvt Ltd has higher ROC compliance (AOC-4, MGT-7, statutory audit irrespective of turnover) compared to LLP's lighter Form 8 + Form 11.