A comparison for founders covering tax, compliance, fundraising, and liability considerations.
Private Limited Companies are better if you plan to raise venture capital, issue ESOPs, or eventually list. Investors prefer shares over LLP partnership units.
LLPs have different audit and compliance requirements from private limited companies. The applicable requirements depend on turnover, contribution, and activities.
Tax rates differ too. A domestic company can opt for a 22% flat rate (25.17% with cess) under Section 115BAA, but must forgo exemptions. LLPs are taxed at normal slab rates, 30% above Rs 1 crore profit.
For a solo founder with no immediate fundraising plans, an OPC (One Person Company) is also worth considering, though it converts to a Pvt Ltd once paid-up capital crosses Rs 50 lakh.
We help founders model the first three years under each structure before they incorporate. The right choice at the start saves lakhs later.
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