Entity Selector — MMG Consulting

Choose the right business structure from day one — your entity type affects tax rates, compliance burden, liability, and your ability to raise funding.

Pro Tip

22%

Pvt Ltd tax rate
(new regime)

~₹15K

annual compliance
cost (LLP)

liability on personal
assets (LLP/Pvt)

Answer 5 questions — get your best match

1How many owners / founders?

Just me (1)

2 – 5

6 or more

2Expected Year-1 turnover?

Below ₹20 L

₹20 L – ₹1 Cr

Above ₹1 Cr

3Do you plan to raise VC / PE / Angel funding?

Yes, definitely

Maybe later

4Do you need FDI / foreign investment or clients?

Yes

5What matters most to you?

Minimal paperwork

Tax efficiency

Liability protection

Scale & credibility

Best Match for You

All Entities — Fit Score

Parameter	👤Sole Proprietor	🤝Partnership	🔗LLP	🏢OPC	🚀Pvt Ltd
Formation & Structure
Governing Law	Shop & Est. Act (optional)	Partnership Act, 1932	LLP Act, 2008	Companies Act, 2013	Companies Act, 2013
Min. Members	1	2 (max 20)	2 (no max)	1 + nominee	2 (max 200)
Incorporation Time	1–3 days	1–7 days	7–14 days	10–15 days	10–20 days
Approx. Setup Cost	₹0 – ₹5K	₹2K – ₹10K	₹5K – ₹20K	₹8K – ₹25K	₹10K – ₹30K
Perpetual Succession	✗	✗	✓	✓	✓
Liability
Personal Liability	Unlimited	Unlimited	Limited	Limited	Limited
Asset Protection	✗	✗	✓	✓	✓
Income Tax (FY 2026-27)
Tax Rate	Slab rates 0–30%	30% flat	30% flat	22% or 25% Sec 115BAA	15% / 22% / 25% New mfg / 115BAA / default
Surcharge (if income >₹1 Cr)	10–25%	12%	12%	10%	10%
Effective Tax (high income)	~42.7%	~34.9%	~34.9%	~25.2%	~25.2%
MAT / AMT	AMT 18.5% (if adj. income >₹20L)	AMT 18.5% (if adj. income >₹20L)	AMT 18.5%	MAT 15%	MAT 15%
Presumptive Tax (44AD)	✓	✓	✗	✗	✗
Dividend Tax	N/A (no dividends)	N/A	N/A	In hands of shareholder	In hands of shareholder
Annual Compliance
Statutory Audit	Tax audit only (if TO >₹1 Cr)	Tax audit only (if TO >₹1 Cr)	If contribution >₹25L or TO >₹40L	Mandatory	Mandatory
ROC / MCA Filings	None	None	Form 8 + Form 11	AOC-4 + MGT-7A	AOC-4 + MGT-7 + ADT-1 + others
Income Tax Return	ITR-3 / ITR-4	ITR-5	ITR-5	ITR-6	ITR-6
Board / Partner Meetings	None	As per deed	As per agreement	Min 2/year	Min 4/year + AGM
Approx. Annual Compliance Cost	₹5K – ₹25K	₹10K – ₹40K	₹20K – ₹60K	₹30K – ₹80K	₹50K – ₹2L+
Compliance Burden	Very Low	Low	Moderate	Moderate	High
Business & Growth
FDI Allowed	✗	✗	〜 Restricted sectors	✗	✓ Most sectors automatic
VC / PE Fundraising	✗	✗	〜 PE only, no equity	✗	✓ Full equity, ESOP
Bank Loan / Credit	Moderate	Moderate	Good	Good	Best
Brand Credibility	Low	Low	Good	Good	Highest
ESOP for Employees	✗	✗	✗	✗	✓
Winding Up	Very Easy	Easy	Moderate	Moderate	Complex
Best Suited For
Ideal Profile	Freelancers, solo traders, small retailers, local services	Family businesses, CA/Law firms (legacy structure)	Consulting firms, service businesses, professional partnerships	Solo entrepreneurs wanting corporate benefits & liability shield	Startups, funded ventures, product companies, export businesses

Key Insight: A high-income proprietor pays up to ~42.7% effective tax (30% + surcharge + cess), while the same profit earned in a Private Limited Company under Sec 115BAA is taxed at only ~25.2%. The larger your profit, the more compelling the case for incorporation.

Sole Proprietorship

Individual slab rates apply

0–30%

base rate

New Regime Slabs0–3L: Nil, 3–7L: 5%, 7–10L: 10%, 10–12L: 15%, 12–15L: 20%, >15L: 30%

Surcharge10% (>50L), 15% (>1Cr), 25% (>2Cr)

Cess4% on tax + surcharge

Max Effective Rate~42.74%

AMT18.5% if adj. income >₹20L

Presumptive (44AD)Yes — 8% / 6% of TO

Section 80C / deductionsAvailable (Old Regime)

Partnership Firm

Flat rate entity

30%

flat base

Tax Rate30% flat on total income

Surcharge12% if income >₹1 Cr

Cess4%

Max Effective Rate~34.94%

AMT18.5% if adj. income >₹20L

Partner's shareTax-free in hands of partner

Remuneration to partnersDeductible (within Sec 40b limits)

LLP

Same as Partnership tax-wise

30%

flat base

Tax Rate30% flat

Surcharge12% if income >₹1 Cr

Cess4%

Max Effective Rate~34.94%

AMT18.5% on adjusted total income

Partner's shareExempt in partner's hands

DDTNot applicable (no dividends)

OPC

Treated as domestic company

22%

Sec 115BAA

Default Rate25% (TO ≤ ₹400 Cr)

Concessional Rate22% — Sec 115BAA (no exemptions)

Surcharge10% if income >₹1 Cr

Max Effective Rate~25.17%

MAT15% of book profit

DividendTaxable in shareholder's hands (slab)

Private Limited Co.

3 rate options available

22%

Sec 115BAA

Default Rate25% (TO ≤ ₹400 Cr) / 30% (above)

Concessional Rate22% — Sec 115BAA

New Mfg. Company15% — Sec 115BAB

Surcharge10% if income >₹1 Cr

Max Effective Rate~25.17% (115BAA)

MAT15% of book profit (not if 115BAA)

DividendTaxable in shareholder's hands

GST Registration: Mandatory for all entity types once turnover crosses ₹20L (services) or ₹40L (goods). Composition scheme available for eligible businesses up to ₹1.5 Cr. An entity type does not change your GST threshold.

Startup India (DPIIT): Only Private Limited Companies and LLPs registered in India are eligible. Recognition brings 3-year income-tax exemption (Sec 80IAC), easier compliance, and self-certification for labour & environmental laws.

Not sure which structure fits your business?

MMG's incorporation advisory covers entity selection, tax structuring, and end-to-end registration.

Book a Free Call →

Which Entity Should You Incorporate?