What is the difference between pvt ltd and proprietorship

Furthermore, given that there must be a nominee director to enable the perpetual existence of the OPC , you may also consider starting a private limited company, which will also have the flexibility of raising funding. While there are no board meetings, you have to conduct a statutory audit, submit annual and IT returns, and comply with the various requirements of the MCA.

The OPC, like the private limited company, has some industry-specific advantages. Nearly the same as a private limited company, with government fees of a little less than Rs. However, this will change for different states; in Kerala, Punjab and Madhya Pradesh, the fees are much higher.

The simple reason for this is unlimited liability. On account of unlimited liability, the partners in the business are liable for all of their debts. So the bank, institution or supplier would have the right to your jewellery, house or car. Furthermore, aside from the ease of set-up and minimal compliance, the partnership offers no benefits over the LLP. If you opt to register it, which is optional, it may not even be cheaper. If you choose not to register your partnership firm, all you need to get started is a partnership deed.

You can have this ready in just two to four days. Even registration, for that matter, can be completed in a day, once you have the appointment with the registrar. As compared with a private limited company or LLP, the procedure for starting up is much simpler. Only small traders and merchants should consider this. Just as in the case of the partnership firm, the simple reason for this is unlimited liability.

Just as a partnership, a sole proprietorship has no separate existence. Most local businesses are run as a Sole Proprietorship, from your grocery store to a fast food vendor, and even small traders and manufacturers. This is not to say that larger businesses do not operate as sole proprietors. If you operate a Sole Proprietorship, you are the only participating owner and there are no other members. An LLP can have other participating members. Although a proprietorship is not technically a business entity, owners can hire employees.

There is no limit on the number of employees that a sole proprietor can employ. As the employer, a sole proprietor is responsible for filing taxes and proper administration for these hires. Sole proprietors typically need a general business license to legally operate their businesses.

The license is usually required if the proprietor has a taxpayer identification number. Sole Proprietorship businesses typically require less paperwork and are easier to maintain than partnerships or corporations. The business owner is responsible for the debts and liabilities, and the accounting and record keeping methods are usually simple and straightforward. A sole proprietor is not entitled to tax deductions on salary paid to himself because these payments are not business expenses. When a sole proprietor pays himself a salary, he merely is transferring funds from a business account he owns to a personal account he owns.

Sole proprietors have several advantages over other business entities. They are easy to form, and the owners enjoy sole control of the business profits.

However, there are some limitations that can be concerning. Being partnership-driven legal form, LLPs are taxed on their profits, which means that their profits are considered to be personal income for the partners. This varies from a Private Limited Company, as they benefit from corporate tax rates which are lower than personal income tax rates.

It is extended to the partners, which means that their personal assets could be seized if firm debts are not paid. InCorp will be able to facilitate the change from a Sole Proprietorship into a Private Limited Company, in the following process:. Due to the swiftness of the process, all business assets must be transferred to the new Private Limited Company within 3 months of incorporation. All financial accounts in the name of the old Sole Proprietorship must be terminated.

New accounts in the name of the Private Limited Company must commence. Business Assets All business assets of the old business in the name of the Sole Proprietorship can be transformed into compensated capital for the Private Limited Company. Any liabilities to creditors must be remunerated before the relocation of business assets. Legal Documentation All leases, contracts, agreements, under the name of the Sole Proprietorship, must be renewed or re-signed in the name of the new Private Limited Company.

Permits In most scenarios, licences and permits are not interchangeable, therefore new permits need to be applied for to authority. How can InCorp help? What is a private limited company?

Basically, a private limited company is an organization which is held privately. Held privately just means that the shares of the company are not tradable to the general population. Private Limited Companies have many characteristics which make them a strong business vehicle. Proprietorships have the slight edge on other companies because of their less stringent compliance requirements.