Pvt Ltd vs LLP vs proprietorship
Most comparison tables stop at incorporation cost, which is the least important number. What decides this is the annual compliance burden and, above all, how much tax you pay when the profit reaches your own bank account. Those two are modelled here.
Your business
The number that actually decides it
For a business whose owners take the profit out, a private limited company is taxed twice. The company pays around 25.17% under the concessional regime, and the shareholder then pays tax on the dividend at their own slab. For someone in the 30% bracket the combined burden lands near 48%.
An LLP or a partnership firm pays about 31.2% at entity level, and the partner's share of profit is exempt in their hands. That is the end of it. Roughly seventeen percentage points of difference, on every rupee distributed.
The gap closes when profit is retained rather than distributed — which is precisely the case where a company makes sense. If you are building something that reinvests its earnings, needs outside equity, or will issue ESOPs, incorporate. If you are running a profitable owner-operated business and taking the money home, the LLP is usually the better structure and most people who set up a company for it did so because someone told them it looked more credible.
Rajasthan incorporation cost, honestly
| Component | Pvt Ltd | OPC | LLP |
|---|---|---|---|
| Name reservation | ₹1,000 | ₹1,000 | ₹200 |
| Main form filing | Nil up to ₹15 lakh capital | Nil up to ₹15 lakh | ₹500 and up by contribution |
| DIN / DPIN | Nil (3 via SPICe+) | Nil | Nil (2 via FiLLiP) |
| PAN + TAN | ₹131 | ₹131 | ₹131 |
| Stamp duty — MOA | ₹500 flat | ₹500 | — |
| Stamp duty — AOA | 0.5% of authorised capital | 0.5% | — |
| LLP agreement | — | — | Form 3 fee plus state stamp duty on the agreement |
Also worth correcting a claim that circulates widely: it is not true that LLP incorporation attracts no stamp duty. The LLP agreement is a separate instrument and carries state stamp duty, executed before Form 3 is filed.
Annual compliance, side by side
| Pvt Ltd | OPC | LLP | Partnership | Proprietor | |
|---|---|---|---|---|---|
| Statutory audit | Always | Always | Above ₹40L turnover or ₹25L contribution | No | No |
| ROC filings | AOC-4, MGT-7 | AOC-4, MGT-7A | Form 8, Form 11 | None | None |
| Board meetings | 4 a year, max 120-day gap | 1 per half year | — | — | — |
| AGM | Mandatory | Exempt | — | — | — |
| Late ROC fee | ₹100/day per form, uncapped | Same | Slab multipliers | — | — |
| Realistic annual cost | ₹25,000–1,20,000 | ₹15,000–50,000 | ₹10,000–40,000 | ₹5,000–25,000 | ₹2,000–15,000 |
| Closure cost | ₹15,000–30,000 clean | Same | ₹6,000–17,000 | Nominal | Nil |
Two traps that cost real money later. The LLP agreement must be filed in Form 3 within 30 days of incorporation and is very commonly missed. And a director's loan from a closely-held company can be taxed as a deemed dividend in the shareholder's hands — repaying it does not reverse the charge. That risk does not exist in an LLP, a partnership or a proprietorship, and it catches a lot of family-run private companies where the director simply draws from the company account.
Common questions
Is company registration really free?
The MCA charges no filing fee on SPICe+, INC-33 and INC-34 where authorised capital is ₹15 lakh or less. That covers the registration fee only. Name reservation, PAN and TAN, and state stamp duty are all still payable, as is the professional fee. Anyone advertising free company registration is describing one line of the bill.
Which is cheaper to run — a company or an LLP?
An LLP, clearly. A private company needs a statutory audit every year regardless of size, must hold at least four board meetings with no more than 120 days between them, and files AOC-4 and MGT-7 where late filing runs at ₹100 a day per form with no cap. An LLP needs an audit only above ₹40 lakh turnover or ₹25 lakh contribution, and its late fees run on a much milder multiplier.
Why does authorised capital matter so much in Rajasthan?
Rajasthan charges stamp duty on the articles of association at 0.5% of authorised capital. Choosing ₹10 lakh of authorised capital instead of ₹1 lakh costs roughly ₹4,500 more at incorporation and buys nothing you cannot get later by increasing capital when you actually need it. Start at the minimum viable figure.
Does an OPC still have to convert above ₹2 crore turnover?
No. The mandatory conversion thresholds of ₹50 lakh paid-up capital and ₹2 crore turnover were abolished in 2021. An OPC can now grow past those figures and continue as it is. Two things do still constrain it: only a resident Indian citizen can form one, and it is not eligible for foreign direct investment.
What is the real tax difference between a company and an LLP?
For an owner who takes the profit out, it is large. A company under the concessional regime pays about 25.17%, and the shareholder then pays tax on the dividend — a combined burden approaching 48% for someone in the top slab. An LLP pays about 31.2% and the partner's share of profit is exempt in their hands, so that is where it ends. The gap is roughly seventeen percentage points, and it closes only when profits are retained in the business rather than distributed.
Have a professional check this
Send us what the tool showed you. We will tell you what the position actually is, and what it would cost to deal with, before you commit to anything.
Incorporation, fixed fee
| Private limited | ₹12,999 + govt |
| LLP | ₹9,999 + govt |
| OPC | ₹11,999 + govt |
| Partnership firm | ₹6,999 + govt |
Plus 18% GST. Government fees at actuals, shown to you before we file.
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