OPC vs LLP Differences in India – Complete Comparison Guide

One Person Company(OPC) is a type of company that can be formed with just one director and one shareholder. This structure allows a single entrepreneur to operate a business with limited liability protection.

Limited Liability Partnership(LLP) is a form of partnership in which the partners have limited liability. It combines the advantages of a partnership and a company. LLPs are governed by the Limited Liability Partnership Act, 2008, and provide flexibility in terms of ownership, management, and liability.

Formation and Legal Structure

To form an OPC, a single director and shareholder are required. The director and shareholder can be the same person. The formation process involves obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), and filing the necessary documents with the Ministry of Corporate Affairs (MCA).

LLPs are formed by a minimum of two partners, with no maximum limit on the number of partners. The partners can be individuals or corporate entities. The formation process includes obtaining a Designated Partner Identification Number (DPIN), registering the LLP agreement with the MCA, and filing the necessary documents.

Liability and Management

In an OPC, the liability of the sole director/shareholder is restricted to their shareholding in the company. This means that the personal property of the director/shareholder is safeguarded from the liabilities of the company. In the case of an LLP, the liability of the partners is limited. This means that their personal property is not exposed to risk in case their liabilities or debts are incurred by the LLP. However, this liability can be imposed upon them in case of fraud or malicious conduct. Management of the OPC is in the hands of its director alone, who possesses power to take decisions regarding its work. In case of an LLP, management and decision-making powers are with the partners of the LLP unless otherwise stated in the Partnership Agreement.

Ownership and Control

An OPC, has only one director or shareholder; in other words, one person can own and control the company. In that case, the OPC must name a nominee to succeed the director if he or she is no longer capable of running or upon the death of the director. Ownership in an LLP is held by the partners as per the agreement within the LLP. The ratio in which the ownership and profit are shared can be mutually agreed to by the partners, and, at any time, the mutual consent of the partners may be used to change the said ratio, therefore giving more flexibility in the management of the business.

Taxation and Compliance

Taxation laws for OPC or LLP are not the same in India.OPC is treated as a distinct legal entity and comes under the Income Tax Act,1961. The corporation has to pay corporate taxes on the income generated, and at the same time, the director/shareholder has to pay his income tax.

In this regard, an LLP is considered to be a partnership; therefore, the LLP will not be liable for taxation on the profits and gains. Each partner has to pay their personal income tax liability separately based on their personal income tax rate. An LLP has additional compliance requirements such as the submission of the annual return and the maintenance of the accounts.

Conversion and Dissolution

OPCs can only be changed into a Private Limited Company once they cross some limits, such as having more than one member or reaching some turnover. In the case of LLPs, the change can take place into either an OPC or a Private Limited Company. Both can be dissolved or wound up voluntarily; however, dissolution of OPC requires the consent of the solo member or the tribunal order itself, whereas the dissolution of the LLP can take place through agreement or the decision of the tribunal in the case of insolvency.

Basic	OPC	LLP
Governing Laws	Companies Act, 2013	Limited Liability Partnership Act, 2008
Ownership	OPCs have a single director/shareholder.	LLPs can have multiple partners.
Liability	OPCs have limited liability to the sole director/shareholder.	LLPs have limited liability to all partners.
Management	OPCs are managed by the single director taking decisions.	LLPs allow the partners to contribute to management and decisions.
Taxation	OPCs are taxed at corporate rates	LLPs are taxed at the partners' individual income tax rates
Conversion	OPCs may be converted into private or public companies	LLPs may be converted into private limited companies
Company Name Suffix	OPC Ltd.	LLP