Difference between pvt ltd vs llp vs public ltd vs opc vs sole proprietorship vs partnership.

Difference Between Pvt Ltd vs LLP vs Sole Proprietorship vs Public ltd vs OPC vs Partnership

If you are planning to start a business or even are just beginning, the legal structure for your business would act as a great essential part regarding operation.

Every single business owner in India must select the best suitable entity type for their business, hence they must know their options and possess a legal structure for their business.

Choosing the proper legal structure is usually aligned to the particular goals of the business and the regional and key laws and regulations where it wants to establish its business.

Well-defined goals allow the entrepreneur to choose the best legal structure for his/her business.

For example, specific companies wish to get the advantages of becoming a startup within India. For this particular purpose, there is a requirement to register the entity as a Private Limited Company or even a Limited Liability Partnership.

Following would be the most common types associated with business structures in India.


Most Common Business Structures in India

  1. Sole Proprietorship
  2. Partnership
  3. Limited Liability Partnership
  4. Private Limited Company
  5. Public Limited Company
  6. One-Person Company

Differences Are as Follows:

1. Meaning:

This point speaks about the meaning of each entity type, how the one entities meaning is different from another

Type of Entity
Sole ProprietorshipA sole proprietorship is a business owned and operated by a single person with no legal difference between the owner and the business entity.
PartnershipA partnership is a legally binding agreement between two or more parties to jointly manage and operate a business and share profits.
Limited Liability PartnershipA limited liability partnership (LLP) is a business structure in which some or all of the members have limited liability.
Private Limited CompaniesThe term "private limited company" refers to a firm that is not publicly traded and whose shares are held privately by its members.
Public Limited CompaniesA public limited Companies one that is listed on a well-known stock exchange and whose shares are freely exchanged by the general public.
One-Person CompaniesA one-person corporation (OPC) is a company founded by one person.


2. Minimum Number of Members:

This heading speaks about the minimum number of members are required to start a business entity, if someone does not meet this requirement they will not be able to form the entity.

Type of Entity
Sole ProprietorshipOnly one person can be a member.
PartnershipTo form a partnership, you'll need at least two people or entities
Limited Liability PartnershipTo form an LLP, you'll need at least two people or entities.
Private Limited CompaniesMinimum 2 members
Public Limited CompaniesMinimum 7 members are required
One-Person CompaniesOnly 1 person is required to start the entity.


3. Transferability/Perpetual Succession:

Transferability or perpetual succession means in case of death of the owner or if the owner wants to transfer his shares to another person will he/she be able to transfer it to another person.

Type of Entity
Sole ProprietorshipNon-Transferable
Limited Liability PartnershipTransferable
Private Limited CompaniesTransferable
Public Limited CompaniesTransferable.
One-Person CompaniesTransferable to only its nominee


4. Maximum Number of Members/Shareholders:

This point speaks about the maximum number of members or shareholders an entity can have.

Type of Entity
Sole ProprietorshipCan have max 1 member.
PartnershipOnly 20 people are allowed to participate.
Limited Liability PartnershipThe number of partners in an LLP is limitless.
Private Limited CompaniesThere can only be 200 members in a Private Limited Company.
Public Limited CompaniesUnlimited
One-Person CompaniesOnly one person can be a member of the OPC


5. Minimum Number of Directors/Partners:

Directors/partners are the decision-makers of the company, and there is a limit on the maximum number of directors a company can have.

Type of Entity
Sole ProprietorshipOwner is the director
PartnershipMinimum 2 people are required
Limited Liability PartnershipMinimum 2 Partners are required
Private Limited CompaniesMinimum 2 Directors are required
Public Limited CompaniesMinimum 3 Directors are required
One-Person CompaniesMinimum 1 Director is required


6. Liability:

A liability is something a person or company owes, usually a sum of money. Limited liability means the owners are liable for only their portion of shares.

Type of Entity
Sole ProprietorshipUnlimited liability
PartnershipUnlimited liability
Limited Liability PartnershipLimited liability
Private Limited CompaniesLimited liability
Public Limited CompaniesLimited liability
One-Person CompaniesLimited liability


7. Taxation:

Taxation talks about the % of tax levied on the profit of an entity, each entity is taxed differently.

Type of Entity
Sole ProprietorshipTaxed as specific, based on typically the total income involving the Proprietor.
PartnershipPartnership gains are taxed on 30% plus overcharge and cess like applicable.
Limited Liability PartnershipLimited Liability Partnerships are taxed at 30% and also surcharge and cess as applicable.
Private Limited CompaniesPrivate Limited Company gains are taxed on 25 % plus overcharge and cess like applicable.
Public Limited CompaniesIt is eligible for tax under Income tax Act, 1961. tax rate of 25% on the complete income
One-Person CompaniesOne person Company profits happen to be taxed at 25% plus surcharge together with cess as pertinent.


8. Transfer of Shares:

Transfer of shares refers to the intentional transfer of shares from one person/entity to another person/entity.

Type of Entity
Sole ProprietorshipTransfer of share not possible
PartnershipNot freely transferable
Limited Liability PartnershipFreely transferable
Private Limited CompaniesFreely transferable
Public Limited CompaniesFreely transferable
One-Person CompaniesTransfer of share not possible


9. Legal Status of Entity:

A Legal Entity is a separate body corporate, that has legal rights and obligations related to agreements, contracts, payments, penalties, etc.

Type of Entity
Sole ProprietorshipProprietorship is not recognised as a different legal entity and the proprietor is personally liable for the liabilities of the Proprietorship.
PartnershipPartnership is not recognised as a separate legal entity and the partners are personally responsible for the liabilities of the relationship.
Limited Liability PartnershipLLP is a separate legal entity registered under the LLP act, 2008. The partners of any LLP are not personally responsible for the financial obligations of the LLP.
Private Limited CompaniesPrivate Limited company is an independent legal entity signed up under the Companies Act, 2013.
Public Limited CompaniesA Public limited company is a separate legal entity under the companies Act 2013
One-Person CompaniesOne Person company is a different legal entity registered under the Companies act, 2013.


10. Foreign Ownership:

This point speaks about if a foreigner can own a type of entity in India, this is applicable for Non-Resident Indians (NRI) as well.

Type of Entity
Sole ProprietorshipForeign ownership is not possible
PartnershipForeign ownership is not possible
Limited Liability PartnershipForeigners are permitted to invest within a LLP just with prior authorization of Reserve Bank of India plus Foreign Investment Advertising Board (FIPB) authorization.
Private Limited CompaniesForeigners can invest in a Private Limited Company through the Automatic approval route in many industries.
Public Limited CompaniesForeigners can invest in a Public Limited Company through the Automatic approval route in many industries.
One-Person CompaniesForeign ownership is not possible



This article provides a brief overview of different legal structures. However, regardless of which business entity you think best suits you, a qualified professional is most suitable to address such questions.


Therefore, it is advised to find a suitable firm with expertise in start-up and incorporation services to ensure the proper legal structure is followed for your business. If you need any help feel free to reach out to us at info@bbnc.in

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