OPC vs LLP Compliance Requirements

One Person Company (OPC) and Limited Liability Partnership (LLP) are both options that entrepreneurs would consider when determining an appropriate business structure because they are easy to run, offer liability protection and do not have demanding compliance. OPC and LLP have different benefits but their compliances differ substantially. It is important to understand such compliance requirements to ensure the smooth running of the business and legality.

What is OPC?

An One Person Company (OPC) is a form of business, practiced in India to enable an individual entrepreneur to have limited liability that entitles him/her to own and operate the corporate business, himself/herself. The sole proprietorship business of OPC gives a single owner business limited company liability and as such that is why it is attractive to a single entrepreneur.

What is LLP?

A semi-form Limited Liability Partnership (LLP) entails the different sets of the traits of a partnership and a company. It offers low level liability to its partners and gives them a chance to run the business. LLPs suit the enterprises and professionals especially small to medium enterprises.

Key Compliance Requirements: OPC vs LLP

Detailed Explanation of Compliance Points

• Annual Filings

1. OPC: These companies are required to file Annual Return (MGT-7) and financial statements (AOC-4) annually with the ministry of corporate affairs (MCA). Failure of compliance might also be fined.

2. LLP: Form 11 (Annual Return) must be presented within 60 days after the financial year has come to the end and form 8 (Statement of Accounts and Solvency) must be presented within 30 days after 6 months of the financial year has come to the end.

• Audit Requirements

1. OPC: A statutory audit will be required when the turnover is more than 2 crore rupees, or the paid-up capital is more than 50 lakh rupees.

2. LLP: An audit is compulsory in case annual turnover is more than 40 lakh rupees and capital contribution surpasses 25 lakh rupees.

• Meetings

1. OPC: The Companies Act, 2013 requires them to meet at least once in a year of a financial year.

2. LLP: LLPs do not have to meet in board, general meetings because LLPs are regulated by an LLP agreement.

• Income Tax Filing

1. OPC: It files income tax as a company and is able to pay corporate tax.

2. LLP: Filing income taxes as a LLP. The partners report their share of profit in their respective returns and LLP is additionally taxed.

• Maintenance of Records

1. OPC and LLP are required by the applicable laws to maintain good books of accounts and financial records. This is in order that these documents should be stored over a minimum period as required by the law (normally 8 years).

• Conversion Restrictions

1. OPC: A Private Limited Company can be formed out of an OPC after the value of the paid-up share capital is more than 50 lakh or the turnover is more than 2 crore.

2. LLP: LLPs can transform into companies or into LLPs under specific determined requirements.

Summary: Which Structure is Easier to Comply With?

• The OPC is considered to be more stringent since it is subject to the company law. It needs a minimum number of board meetings per year, several MCA forms to be filled and more rigorous audit requirements.

• Partners find LLP more flexible and easier to manage as it has fewer paperwork and no mandatory meetings.

Conclusion

The difference between OPC and LLP is that both are based on your business objectives, infrastructure and readiness to manage compliance:

• OPC is good in case you desire single ownership with a limited liability and are not bothered with highly strict compliance rules.

• When you need a structure with limited liability, and find it easier to comply, LLP would be the best.

Nobody wants to get punished; therefore, both have to take care of their compliance needs, or they are bound to suffer.

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