Entity comparison · India · 2026
Limited Liability Partnership vs One Person Company
LLP vs. OPC: Picking the Lesser Evil
Honest, statute-cited comparison — no referral fees, no upsell. Every claim on this page ties back to the Companies Act 2013, LLP Act 2008, Income Tax Act, or the current FDI Policy.
⚠ The trap most founders fall into
OPC forces you to nominate someone who inherits the company if you die — an awkward conversation. LLP requires a second partner, bringing another person into the legal structure. Neither is ideal for a truly solo founder.
Side-by-side
Limited Liability Partnership
Where it wins
- ✓Full limited liability — partners' personal assets are legally ring-fenced.
- ✓No mandatory statutory audit if turnover < ₹40L and capital contribution < ₹25L.
- ✓Tax-efficient: profit distributions are tax-free at partner level (no Dividend Distribution Tax trap).
- ✓Annual compliance: ₹8,000–₹25,000 vs. ₹80,000 for a Pvt Ltd.
Where it hurts
- ✗VCs cannot invest. No share capital means no institutional equity funding. Period.
- ✗Cannot issue ESOPs. Attracting talent with stock options is structurally off the table.
- ✗Minimum 2 Designated Partners required from Day 1.
- ✗LLP → Pvt Ltd is not a 'conversion' — it's a full dissolution and fresh re-registration. Plan accordingly.
One Person Company
Where it wins
- ✓Full limited liability for a solo founder — personal assets protected.
- ✓Looks more credible than a proprietorship for B2B enterprise contracts.
- ✓100% ownership and control. No partner disputes.
Where it hurts
- ✗Mandatory statutory audit regardless of revenue — the same as a full Pvt Ltd.
- ✗Must appoint a nominee director (in case you die). Awkward legal paperwork.
- ✗Previously had mandatory conversion thresholds — these were removed in 2021. OPC to Pvt Ltd is now purely voluntary under §18.
- ✗Cannot raise VC equity or issue ESOPs.
Head-to-head on the metrics that matter
Setup Cost (10 = cheapest)
Limited Liability Partnership
7.5
One Person Company
5.5
Annual Overhead (10 = lightest)
Limited Liability Partnership
7.2
One Person Company
3.2
Tax Efficiency (10 = least tax drag)
Limited Liability Partnership
7.8
One Person Company
4.5
Asset Protection
Limited Liability Partnership
8.5
One Person Company
8.0
VC / Funding Ready
Limited Liability Partnership
0.0
One Person Company
0.0
Exit Ease
Limited Liability Partnership
6.0
One Person Company
4.5
Scores are makeitlegit's own 0–10 ratings, published in the entity engine and updated as regulation changes.
The verdict
Which one should you actually pick?
LLP makes more sense if you genuinely have a second working partner. OPC if you're truly solo and need limited liability. For everyone else: Proprietorship until you outgrow it.
Next steps
Already incorporated?
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Last verified: 2026-08-04. Written by chartered accountants at Harun Raaj & Associates. We never accept referral fees from other CA firms or incorporation platforms — the recommendations on this page reflect what we'd tell a paying client. If any statute, tax rate, or MCA rule changes and this page hasn't been updated within 30 days, tell us.