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A Private Ltd Company Vs A One Person Company: How To Choose Between Them?

Pragya Pathak

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Updated: 04-02-2026 at 3:30 PM

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500K+ Users

Various types of business models comply with the Companies Act, 2013. This not only gives people innumerable choices and the opportunity to start their businesses, but it can also confuse them, as choosing the right kind of business is extremely important. Two of the most important business models are the One Person Company (OPC) and the Private Limited (Pvt Ltd) Company.

An OPC is solely for those who want to start their own small businesses without any partners or shareholders; on the other hand, a Pvt Ltd Company is ideal for those who desire to grow their businesses and operate with other people as partners or shareholders.

Read this article to know about the Private Ltd Company and One Person Company, what differences and similarity it entails. Know which type of business model suits your company better.

Overview

The table below summarises key details about both a One Person Company and a Private Limited Company.

Name of the company	One Person Company	Private Limited Company
Law	Companies Act of 2013	Companies Act of 2013
Ideal for	Single entrepreneurs	Financial services, Tech startups, or medium-sized business units
Minimum and maximum number of members	01	2 to 200
Mode of registration	Online	Online, like OPC registration online in India

What Is A Private Limited Company?

A Private Limited Company is one of the most popular types of business entities recognised under the Companies Act of 2013. This type of business model is ideal for those entrepreneurs who don’t want to start their businesses alone but with a limited number of people, with the advantages that come along with a corporate status, but at the same time, flexibility.

A Pvt Ltd Company is a separate legal entity, which means that the business’s identity is different from that of the owner, thereby protecting the owner's personal assets. It is also an ideal combination of a company with a corporate status and a partnership with flexible terms and features, like limited liability. This type of business model allows entrepreneurs to grow their business entities, but with minimal financial risks.

What Is An OPC?

A One Person Company (OPC) is a type of business model recognised under the Companies Act of 2013. This type of business model allows a single person to establish and run their own companies with a separate legal identity. Any citizen of India or even a Non-Resident Indian (NRI) can apply to open an OPC. This new model of business was introduced by the authorities to promote entrepreneurship among Indian citizens.

Features Of A Private Limited Company And A One Person Company

There are several important features of a Private Limited Company and a One Person Company. Some of the key features of both types of business models are described below in brief points:

Feature Of A Pvt Ltd Company

Unlike a One Person Company, where the minimum and maximum number of members can only be one, in a Private Ltd Company, the members can range between 2 to 200.
The liability of shareholders in this type of business model is limited, which means that shareholders will only contribute to a certain agreed-upon amount and not more than that to pay off the debts of the business. This provision of limited liability protects the personal assets of the shareholders.
To successfully do the OPC registration process, individuals need to deposit a minimum capital of Rs. 1 lakh, but in a Private Ltd Company, there is no requirement for a minimum amount of capital.
A Private Ltd Company can raise funds from different sources and ways, such as through angel investors, venture capitalists, or private equity.

Features Of An OPC

As it is a legally recognised model, the identity of the business entity is different from the identity of the business owner. This feature protects the personal assets of the business owner in case the business goes into immense debt.
The guidelines concerning the establishment of an OPC are comparatively much more relaxed; therefore, it is easier for entrepreneurs to open their own One Person Companies.

How To Register For A Private Limited Company And A One Person Company?

The application process for both a One Person Company registration and a Private Ltd Company is fairly simplified and a bit similar. The registration process for both companies is mentioned below in a stepwise manner for one’s clarity:

Private Limited Company Application Process

Step 1: Please fill in the SPICe+ (Simplified Proforma for Incorporating Companies Electronically) Part A form.

Step 2: Ensure that you have all the required documents, such as a Memorandum of Association (MoA), which outlines the objectives of the company, and Articles of Association (AoA), which outline the laws that the company is supposed to follow.

Step 3: Please fill out the SPICe+ Part B form as well, and then compile all the documents together.

Step 4: Recheck the filled information and then submit it all to the Ministry of Corporate Affairs (MCA).

Step 5: Wait for verification and approval. After successful verification, the Registrar of Companies (ROC) issues the Certificate of Incorporation in the name of the business. The whole process of registration, like OPC company registration, takes about 10 to 15 days.

Application Process For One Person Company

Step 1: Begin the registration process by applying for a Digital Signature Certificate and a Director Identification Number.

Step 2: Fill in all the required details in a SPICe+ form, like the proposed name of the company, reason for choosing that name, etc.

Step 3: Upload the scanned copies of all the required documents.

Step 4: Recheck the filled information in the form and then submit it to the MCA website and wait for the verification to be completed.

What Are The Documents Required To Register For Private Limited Company And One Person Company?

There are some documents that the applicants are required to attach while registering their business either as a Private Ltd Company or a One Person Company. The list of required documents is as follows:

Documents needed while applying for a Pvt Ltd Company	Documents needed while applying for a One Person Company
Aadhaar card of all directors PAN card of all directors Proof of address of all the directors and the company Digital Signature Certificate (DSC) of all the directors	Memorandum of Association (MoA) Articles of Association (AoA) Form INC 3 with an Aadhaar and PAN card Proof of Registered Office of the proposed company and proof of ownership, and a No Objection Certificate (NOC) from the owner

Also Read: GST 2.0 In India- Reforms, New Tax Structure & Impact On Consumers And Businesses In 2026

Difference Between A Private Limited Company & An OPC

The difference between a Private Limited Company and a One Person Company is mentioned below in a tabular format:

Components	Private Limited Company	One Person Company (OPC)
Ideal for	Financial services, Tech startups, or medium-sized business units	Franchises, Retail stores, or Small businesses
Minimum and maximum number of partners or shareholders	Minimum 02 and maximum 200	Minimum 01 and maximum 01
Nominee requirements	Not needed	One nominee required
Minimum amount of capital	No minimal capital needed	Minimum authorised capital should be around Rs. 1 lakh; no requirement for a minimum paid-up capital
Tax	Nominal tax rate, excluding surcharge and cess, which is around 25%	Around 25%, excluding surcharge and cess
Fundraising	Many options for fundraising	Limited options for fundraising
ESOPs	Allowed to issue ESOPs to employees	Not able to issue ESOPs to the employees
DPIIT Recognition	Eligible for DPIIT recognition	Ineligible for DPIIT recognition
Share transfer	Easily transferred by amending policies in the AoA.	Share transfer is not possible; it can only be done after the transfer of ownership.
Basic laws to fulfil	Mandatory four board meetings Audits are not mandatory	Minimum two board meetings Audits are mandatory
Can directors be foreigners?	Yes, Non-Resident Indians (NRIs) or Foreigners can be appointed as directors.	Yes
Foreign Direct Investment	Eligible through the automatic route.	Not eligible

What Are Some Similarities Between A Private Limited Company & An OPC?

Along with differences, there are some similarities between a Private Limited Company and an OPC. Those similarities are as follows:

Both corporate entities ensure that the owner’s assets remain protected and do not get sold off to pay the debts of the business.
Both Private Limited Companies and a One Person Company are separate legal entities, which means that the business has an identity of its own, which is different and detached from the owners.
Both types of companies are required to comply with the basic corporate tax rates.

Important Points To Consider While Choosing Between An OPC & A Pvt Ltd Company

It is extremely important to choose the right kind of business model to start one’s business on the right foot. Some important points to take care of while selecting the type of business are laid down below for one’s reference:

Begin by assessing the size and nature of your business. If you want to establish a small-scale and local business, opt for a One Person Company, but if you are planning to start a business with multiple parties and wish to expand it further, the ideal option is a Private Limited Company.
Think about how you want to raise funds for your business. If you want to raise funds through equity, then a Private Ltd Company is best for that, but if you are planning to raise funds through loans, an OPC can be the better option.
Every business model is required to complete a set of formalities to successfully register itself with the concerned authorities of India. Therefore, please educate yourself about the necessary compliances of all the business models you are interested in and then choose the best that suits you.

Conclusion

Overall, the main differences between a One Person Company and a Private Limited Company lie in minor components, like ownership, protection of growth, and regulatory guidelines. Both the companies are quite different from one another, an OPC for single individuals wanting to start their own businesses, while a Pvt Ltd Company for those who want to start their businesses in partnership with other people.

Entrepreneurs who are thinking of starting their own small businesses or ventures should consider both Private Limited Companies and OPC registration for startups to make informed decisions as per their needs and requirements.

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