If you are going to start a business, then you have to be careful that you have chosen the right form of activity because it is essential to select the correct type of business organisation because there are differences between kinds of business organisation and have to follow different compliances, so you have to choose wisely. This article talks about the Limited Liability Partnership and One Person Company and its registration and their differences.
Limited Liability Partnership
Limited Liability Partnership (LLP) is a type of organisation which can be incorporate by two or more person, it is like a partnership firm, but there are differences between them. There is a limited liability on Partners, and it is a Separate Legal Entity which can sue or can be sued. LLP is regulated by the Limited Liability Partnership Act and legal compliances made under the Registrar of Company. If you want to register your business as an LLP then you have to first obtain Digital Signature Certificate for the proposed director, then you have to reserve your LLP name through LLP-RUN, then you have to file incorporation application. In recent amendment Procedure of incorporation has been changed so now you have to file Fillip Form for inclusion. After establishment, you have to submit your LLP agreement to the ROC. As you can see above process of Registration of LLP is easy and straightforward, you can file these form online on the official website of Ministry of Corporate Affairs.
One Person Company
One Person Company (OPC) is a type of Organization which can be incorporate by only one person, this concept introduced by Companies act 2013. It is a separate legal entity which can sue and can be sue, and it is a separate legal entity from its promoter. If you want to incorporate your own one-person company, then you have to register it under the Ministry of Corporate affairs and have to do all compliances with the registrar of companies every year. In case of Failure of yearly agreements, you may have to face legal consequences. During Incorporation, you have to nominate a nominee director in the Memorandum of Association and Article of Association so he will become the owner of the company in case of sole director become disabled. If you want to register you one person company Registration then you have to follow MCA procedure which says that first you have to create Digital signature certificate and Directors identification number of proposed director then you have to reserve your company name, then you have to file your MoA and AoA. Then you can submit your incorporation form online on the Official website of Ministry of Corporate Affairs.
What are the differences?
There are many differences between the One Person Company and Limited Liability Partnership; here some crucial discrepancies are mention below
LLP is governed by the LLP laws whereas One Person Company is governed by Companies act, 2013 but both have to do compliances with the Registrar of Companies.
A significant difference is OPC can be incorporate by only one person whereas there are two or more partners for incorporation of an LLP.
In One Person Company only one person required during the incorporation of an organisation whereas in LLP there is two or more person needed during the integration of LLP firm.
During incorporation, there is a requirement of Memorandum of Association and Article of Association for One Person Company whereas LLP agreement is required document for inclusion.
In One Person Company, the owner has to nominate nominee whereas in LLP there is no requirement.
Foreigner now allowed investing in One Person Company whereas in LLP they become a partner after approval from the government.
In both organisations, there is no requirement for annual meetings.
Rising of Capital is easy in LLP whereas there will be difficult for the owner of the One Person Company.
In OPC they have to maintain a book of accounts and comply with the statutory audit requirements and have to submit income tax returns and have to file annual filing with the registrar of companies whereas, in case of LLP, they have to comply with a statutory audit in the case where turnover exceeds Rs. 40 Lakh or capital contribution exceeds Rs.25 lakh. So there is less compliance required for LLP.
As you can see that LLP is right over the OPC because there are fewer compliances required for LLP and it is easy for LLP to raise capital for business and decision making will be right in LLP because partner will share their experience. If you want to register your business as OPC or LLP, then you can file your incorporation application online on the Official website of Ministry of Corporate Affairs. A process of registration is simple and straightforward as you can see above and you have to consider the above-given points so it will help you to choose a correct form of organisation for your business.