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Which Business Structure Suits You?

Proprietorship, Partnership, LLP, One Person Company or Private Limited Company. See how the five compare on liability, tax, audit, setup and compliance.

See the full comparison
01 — At a Glance

Pros and Cons, Simplified

Private Limited Company

Best for: Founders who want the most trusted setup, with a clear ownership structure. It also makes raising funds, hiring and scaling easier.
Pros
  • Shareholders & directors could be separate & no bar on count
  • Tax rate is 22%++
  • Remuneration to management is fully allowable
Cons
  • Could take loan only from specified parties
  • Preservation of audit trail reports for accounting required
  • Dividend out of profits is taxed again in hands of shareholders

One Person Company

Best for: Solo founders who want the credibility of a registered company
Pros
  • Could be incorporated with only 1 member
  • Tax rate is 22%++
  • Remuneration to management is fully allowable
Cons
  • Could take loan only from specified parties
  • Preservation of audit trail reports for accounting required
  • Dividend out of profits is taxed again in hands of shareholder

Limited Liability Partnership

Best for: Partners who want low compliance and limited liability
Pros
  • Board meeting & General meeting requirements not applicable
  • No tax on distribution of income to partners in their hands
  • Capital introduction from partners is faster & cheaper
Cons
  • Tax rate is 30%++
  • Remuneration & Interest to partners is partially allowable in some cases
  • Partners & management is not separate
02 — Side by Side

The Full Comparison

Swipe the table sideways to see all five structures.

ParticularsProprietorshipPartnershipWe registerLLPWe registerOne Person CompanyWe registerPrivate Limited Company
Constitution
Separate PANNoYesYesYesYes
Liability of owner/ partner/ shareholderUnlimitedUnlimitedLimitedLimitedLimited
Minimum number of owner/ partner/ shareholder12212
Taxation
Tax RateSlab, 30%++ above 15L30%++30%++22%++22%++
Taxation of distribution of income to owners in hand of ownersNo separate entity thus not taxableNot taxable in hands of partnersNot taxable in hands of partnersDividend is taxable in hands of shareholderDividend is taxable in hands of shareholders
Tax deduction for remuneration to owner/ partner/ shareholder/ directorN.A.Allowed partially as per ceilings mentioned in IT ActAllowed partially as per ceilings mentioned in IT ActFully allowableFully allowable
Tax deduction for Interest to owner/ partner/ shareholder/ directorN.A.Allowed upto 12% p.a.Allowed upto 12% p.a.Fully allowableFully allowable
Accounts & Audit
Applicability of Income Tax audit (criterion based)YesYesYesYesYes
Audit under any other ActNoNoLLP Act (criterion based)Cos. Act - compulsoryCos. Act - compulsory
Preservation of audit trail reports for accountingNot mandatedNot mandatedNot mandatedYes, mandatoryYes, mandatory
Annual financials accessible to publicNoNoYesYesYes
Incorporation
Restriction on name of entityN.A.N.A.Yes, to be approved by RoCYes, to be approved by RoCYes, to be approved by RoC
Digital Signature required during incorporationNoNoYes, for all partnersYes, for the subscriber cum directorYes, for all directors & subscribers
DIN requirement for partner/ director(s)NoNoYesYesYes
Incorporation process
  1. Procure Trade license
  2. P Tax registration
  1. Execute Partnership deed
  2. Procure PAN
  3. Procure Trade license
  4. P Tax registration
  1. Name reservation
  2. Execute Partnership deed
  3. Filings with RoC
  4. Procure PAN
  5. Procure Trade license
  6. P Tax registration
  1. Name reservation
  2. Filings with RoC for Incorporation, PAN, TAN
  3. Procure Trade license
  4. P Tax registration
  5. Open current account
  6. Infuse capital
  7. File INC‑20A
  1. Name reservation
  2. Filings with RoC for Incorporation, PAN, TAN
  3. Procure Trade license
  4. P Tax registration
  5. Open current account
  6. Infuse capital
  7. File INC‑20A
Miscellaneous
Can take loan fromAnyoneAnyoneAnyoneCompanies/ Director/ Relative of director onlyCompanies/ Director/ Relative of director only
Compliances with RoCNoNoYesYesYes
Board meeting & General meeting requirementsN.A.N.A.N.A.Yes, with some relaxationsYes

“++” means plus applicable surcharge and cess. General information, last reviewed in September 2026. Rules and tax rates can change; your CA will confirm what applies to your business.

Still Not Sure Which One to Pick?

Every LaunchPad plan starts with a 30-minute, 1-to-1 call with a CA/CS. We’ll help you choose before we file anything.