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Startup ecosystem · Incorporation

Pvt Ltd vs LLP vs OPC: which to choose and why

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Pvt Ltd: Best for VC-fundable startups. Can issue equity (CCPS, CCD, options). Corporate tax 22% (Sec 200, Income-tax Act 2025, old Sec 115BAA) or 15% for new manufacturing (Sec 201, old Sec 115BAB). Compliance-heavy: ROC filings, board meetings, statutory audit mandatory.

Provisions

Companies Act 2013 | LLP Act 2008 | IT Act 1961, Sec 115BAB (now 201)

Analysis

LLP: Best for service businesses, CA firms, consulting. No dividend distribution tax. Partners pay tax at slab rate on their profit share. Cannot issue shares, VCs cannot invest. No statutory audit below ₹40L turnover / ₹25L capital. OPC (One Person Company): Solo founder, no intention to raise VC. Same compliance as Pvt Ltd but only one shareholder. Converts to Pvt Ltd when turnover exceeds ₹2Cr or paid-up capital exceeds ₹50L.

Close

  1. You plan to raise external equity (angels, VCs, ESOP pool)
  2. You want Sec 140 (old Sec 80-IAC) tax holiday (Pvt Ltd and LLP both qualify)
  3. You have multiple co-founders with different equity stakes
  4. You are building to sell, M&A exit requires Pvt Ltd structure

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