Which one to choose among - A Private Limited Company or an LLP or an OPC?

Ca Ankit Rungta

May 05th, 2016

This is, and I can bet all the beer in the above picture, is the most common question that confuses most start up founders and entrepreneurs who do not have any inkling of How the Business is done. And in a country like India, where even professionals try to figure out the best ways to decipher legal and tax laws, this question becomes compulsory to answer before starting your venture. The answer can be simple and yet is complicated to understand. Here’s a humble approach that will connect to start-ups the way they like it. “Tu Beer Hai!”

Private Limited Company (Kingfisher – King of Good Times):

A private limited company is nothing ordinary when your CA mumbles lot of legal and Compliance Mumbo-Jumbo! Mind you, it is! Else, we CAs would have no livelihood! The thing to understand here is what do you really need? A private Limited Company is expensive, lots of signatures, compliance, registrations, bullshits, etc. the list is endless. The real advantage comes from 2 things:

  • Investor Participation/ESOPs
  • Voting Rights

Believe me! If you don’t have any of the above requirement, skip reading this article and have fun starting out any way you want to! It doesn’t really matter what do you choose unless you need the above two things.

Limited Liability Partnership (LLP) - (Heineken – Opens your world):

An LLP is a fun way of taking risks, with your partners in crime (Co-founders), without losing. Confused? It’s a normal, regular partnership with a benefit that your personal stuff will always be personal. Just like Private Limited Company. Period! Cool. Huh. That’s pretty much to it. There is no other significant advantage. It’s a regular partnership!

Related Topic: 

One Person Company (OPC): (Carlsberg – It’s time for Carlsberg):

OPC. Wow! When I first heard about this concept back in 2010. I was like, this will never come in India! But year 2013 changed that and Yay! We now have OPC except what exactly is it? One Person Company (OPC) is, like LLP, a fun way of taking risks, but alone,  without losing. Pretty Simple, huh! It’s for the sole founders who don’t want others meddling or slowing them down in their venture and have a very clear-cut agenda with their venture.

 So, have you got an idea? It’s time to open up a beer and start your journey!