Most first-time sellers do not need to decide this in one go. The five questions below narrow it down quickly, and the table after them puts the four structures side by side. If you are comparing Pvt Ltd vs LLP vs proprietorship, or OPC vs proprietorship, start with liability and investors, because those two usually decide it.
Question 1: How much personal risk are you willing to carry?
A proprietorship is not a separate legal entity. You and the business are the same person, so if the business owes money or a customer claim goes wrong, your personal assets can be reached. Pvt Ltd, OPC and LLP are separate legal entities with limited liability: your exposure is generally limited to what you put in, though directors and partners can still be personally liable for their own wrongful acts or personal guarantees (banks often ask for these).
If you sell products that can cause harm (food, cosmetics, electronics, children's items) or you will carry a lot of stock on credit, limited liability is worth paying for.
Question 2: Will you have co-founders or investors?
A Pvt Ltd needs at least two directors and two shareholders, and at least one director must be resident in India. It is the structure investors and ESOP plans are built around. An LLP needs at least two partners (with two designated partners, one resident in India) and can take investment, but it has no shares or ESOPs, so most venture investors prefer a company.
An OPC is for one owner. It needs a nominee, and the owner must be an Indian citizen; since April 2021 the owner can be resident in India or abroad. A person can have only one OPC. A proprietorship is one individual, with no way to bring in outside equity.
Mandatory OPC conversion: the old rule forcing an OPC to become a private or public company once paid-up capital crossed ₹50 lakh or turnover crossed ₹2 crore was removed from 1 April 2021. An OPC can now stay an OPC at any size, and can voluntarily convert at any time by adding members and directors.
Question 3: What annual compliance can you realistically keep up with?
This is where structures differ most for a small seller.
- Proprietorship: no company or LLP filings. You file your income tax return and GST returns. A tax audit applies only above the turnover limits in income-tax law.
- LLP: Form 11 (annual return) is due by 30 May and Form 8 (statement of accounts and solvency) by 30 October. An audit is required only if turnover exceeds ₹40 lakh or partners' contribution exceeds ₹25 lakh. Late filing attracts a fee of ₹100 per day, with no cap.
- Pvt Ltd and OPC: a statutory audit every year regardless of turnover, auditor appointment, AOC-4 (financial statements) and MGT-7 (annual return) filed with the Registrar of Companies, board meetings, director KYC, and statutory registers. Small companies and OPCs file the shorter MGT-7A. AOC-4 is due within 30 days of the AGM and MGT-7 within 60 days; an OPC does not hold an AGM and has its own timelines.
The "small company" limit was raised from 1 December 2025 to paid-up capital up to ₹10 crore and turnover up to ₹100 crore, which brings more companies into the lighter rules. A proposed Corporate Laws (Amendment) Bill, 2026 would raise it again, but it was still before Parliament at the time of writing, so do not rely on it.
Running costs are real: the audit, filings and a part-time accountant are the main items. Fees vary by city and complexity, so ask for a written quote instead of trusting a headline number.
Question 4: What does a new entity mean for your marketplace seller account?
Each structure has its own PAN, and GST registration is tied to PAN. If you are already selling as a proprietor and later move to a Pvt Ltd or LLP, the new entity has a new PAN and a new GSTIN, and Amazon Seller Support has told sellers in its forum that a change of business type means opening a new seller account. Plan for re-listing, brand registry and bank account changes. Marketplace policies change, so confirm in your Seller Central or Flipkart seller dashboard before you switch.
This is the main reason to choose carefully at the start: moving later is possible, but it is not free. Our trademark and Brand Registry service covers the brand side, and GST registration covers the tax side.
Also note that marketplaces collect GST TCS (currently 0.5%) and income-tax TDS (currently 0.1%, now under section 393(1) of the Income-tax Act, 2025). These apply on the sale value whatever structure you choose, but a small individual seller below the TDS limit may not have TDS deducted.
Question 5: How will you be taxed, at a high level?
A proprietor's profit is added to their personal income and taxed at individual slab rates. A company is taxed as its own entity, and the owners are taxed again if they take profit out as dividends. An LLP is taxed as its own entity at a flat rate, and partners' share of profit is not taxed again. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, but the broad structure is the same. Rates and regimes depend on your income, so have a CA run the numbers for your actual profit before deciding.
How do Pvt Ltd, LLP, OPC and proprietorship compare?
| Point | Proprietorship | OPC | LLP | Pvt Ltd |
|---|---|---|---|---|
| Liability | Unlimited, personal | Limited | Limited | Limited |
| Minimum people | 1 | 1 member plus a nominee | 2 partners | 2 directors, 2 shareholders |
| Investor-friendliness | None | Low (one owner) | Moderate | Highest |
| Typical annual compliance | Income tax and GST returns | Audit, AOC-4, MGT-7A, income tax | Form 8, Form 11, audit only above limits | Audit, AOC-4, MGT-7, board meetings |
| Conversion later | No direct conversion; business is transferred to a new entity | Can convert to Pvt Ltd or public company at any time | Can be converted to a company | Can be converted to an LLP |
A proprietorship has no separate registration of its own. You start with your PAN and then take GST, Udyam and, where applicable, a shop licence. Setting up a Pvt Ltd, LLP or OPC is a formal incorporation process. See business registration for what each involves.
What we'd check in your case
- Are you selling alone or with a partner, and will anyone invest within two years?
- What are you selling, and how much stock will you hold?
- Are you already selling under a proprietorship GSTIN, and which marketplace accounts would need to move?
- Do you want to register a brand? The trademark applicant should match the entity that will own the brand. See trademark registration.
- Do you have someone to handle the audit and filings?
Often the honest answer for a first-year seller is to start as a proprietorship, or an OPC if you want limited liability on your own, and move to a Pvt Ltd when co-founders or funding appear. If it is clear you will need a Pvt Ltd early, start there and avoid the move. Send us your plan on WhatsApp and we will tell you which one fits, and which registrations you can skip.
Not sure how this applies to you? Tell us what you sell and where. We'll tell you what you need, and what you don't, in a free 15-minute fit check.
Ask on WhatsAppRelated questions
Is OPC better than proprietorship for an online seller?
An OPC gives you limited liability and a separate legal identity, but it needs an annual audit and ROC filings. A proprietorship has almost no filings beyond tax and GST but leaves your personal assets exposed. If your risk is low and you are testing the market, a proprietorship is fine; if you hold stock or take credit, an OPC is worth considering.
Can an NRI start an OPC for e-commerce?
Yes. Since 1 April 2021 an Indian citizen can incorporate an OPC whether resident in India or not. The nominee must also be an Indian citizen. Foreign citizens cannot form an OPC, and each person can be the member or nominee of only one OPC.
Is an audit compulsory for an LLP or a proprietorship?
An LLP needs an audit only if turnover exceeds ₹40 lakh or partners' contribution exceeds ₹25 lakh. A proprietorship needs a tax audit only above the turnover limits in income-tax law. A Pvt Ltd or OPC must be audited every year, whatever its turnover.
Do I need a new GST number if I move from proprietorship to Pvt Ltd?
Yes. A new entity has its own PAN, and GST registration is linked to PAN, so it needs a new GSTIN. Marketplaces generally expect a new seller account too, so confirm with Amazon or Flipkart before you shut the old one.
Can I sell on Amazon or Flipkart without a company?
Yes. You can register as an individual or proprietor with your PAN, GSTIN and a bank account. A company or LLP is not required by the marketplaces, though they ask for that entity's own documents if you choose one.
See our service: Company registration for e-commerce →
Sources
- AZB & Partners - Recent amendments to incorporation rules
- Companies (Specification of Definition Details) Amendment Rules, 2025 - small company thresholds (G.S.R. 880(E))
- PRS India - Corporate Laws (Amendment) Bill, 2026
- ClearTax - LLP annual filings (Form 8, Form 11, audit limits)
- Income Tax Department - Income-tax Act 2025 comes into force from 1 April 2026
- TAXAJ - GST TCS under section 52 (0.5% from 10 July 2024)
- TDSMAN - TDS on e-commerce, section 393(1) (formerly 194-O)
- Tally - Proprietorship registration in India
- Amazon Seller Forums - Changing business type needs a new account
General information based on rules as of November 2026, not legal or tax advice for your specific case. Rules change; we confirm what applies to you before any filing.