Private Limited vs Proprietorship
Detailed comparison of Private Limited Company vs Sole Proprietorship. Compare pros, cons, costs, compliance requirements, taxation, and get expert guidance to choose the right structure for your business.
View All ComparisonsQuick Comparison
| Aspect | Private Limited | Proprietorship |
|---|---|---|
| Liability Protection | Private Limited offers limited liability | Private Limited offers limited liability |
| Compliance | Proprietorship has minimal compliance | Proprietorship has minimal compliance |
| Fundraising | Private Limited can raise funds | Private Limited can raise funds |
| Costs | Proprietorship has lowest costs | Proprietorship has lowest costs |
| Credibility | Private Limited has much better credibility | Private Limited has much better credibility |
Detailed Comparison
Private Limited Company
Pros
- Limited liability protection
- Separate legal entity
- Easy to raise funds
- Professional credibility
- Perpetual existence
- Better for scaling
Cons
- Higher compliance
- More complex registration
- Higher costs
- Board meetings required
Costs
- Registration: ₹15,000 - ₹25,000
- Annual: ₹20,000 - ₹30,000
- Compliance: ₹15,000 - ₹25,000 per year
Compliance Requirements
- • Annual filing
- • Board meetings
- • Statutory audit
- • Income tax return
- • GST compliance
Taxation
Corporate tax: 25-30%
Best For
- • Growing businesses
- • Investment-seeking startups
- • Professional services
- • Technology companies
Sole Proprietorship
Pros
- Simplest business structure
- No registration required
- Lowest costs
- Complete control
- Easy to start
- Minimal compliance
Cons
- Unlimited liability
- No separate legal entity
- Cannot raise funds
- Limited credibility
- Personal assets at risk
- Difficult to scale
Costs
- Registration: ₹0 - ₹2,000
- Annual: ₹0 - ₹3,000
- Compliance: ₹2,000 - ₹5,000 per year
Compliance Requirements
- • Income tax return (if applicable)
- • GST registration (if turnover exceeds threshold)
- • Basic bookkeeping
Taxation
Taxed as individual income, slab rates apply
Best For
- • Solo entrepreneurs
- • Small businesses
- • Low risk ventures
- • Quick start businesses
Expert Recommendation
Choose Private Limited for liability protection, funding needs, and growth. Choose Proprietorship for simplicity, lowest costs, and solo small businesses.
Frequently Asked Questions
Common questions about Private Limited vs Proprietorship
Which structure is better for liability protection?
Private Limited offers limited liability, Proprietorship has unlimited liability
Which has lower compliance requirements?
Proprietorship has minimal compliance, Private Limited has extensive requirements
Which is better for raising funds?
Private Limited can raise funds, Proprietorship cannot
Which has lower costs?
Proprietorship has lowest costs, Private Limited has higher costs
Which offers better professional credibility?
Private Limited has much better credibility
What are the tax implications?
Proprietorship offers better tax benefits for small businesses
Which is better for scaling the business?
Private Limited is essential for scaling
Can one structure be converted to another?
Proprietorship can be converted to Private Limited or OPC
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