Company, Partnership, Proprietorship or OPC: Choosing a Business Structure in Bangladesh

In this guide: The comparison table · Liability and the bank · Tax: the comparison nobody does properly · Compliance: what each form costs you every year · Changing later, and the draft 2026 amendment

The short answer

If you are alone and small, start as a proprietorship and incorporate when a bank, an investor or a large customer asks for a company. If there are two or more of you and the business will stay modest, a registered partnership with a properly drafted deed is cheap and flexible — but understand that each of you is personally liable for all of it. If you expect to raise money, sign leases and contracts worth more than you could personally absorb, employ a workforce, bring in a foreign partner, or sell the business one day, form a private limited company from the start; the extra Tk 15,000–40,000 of set-up cost and the annual audit are the price of limited liability and of shares that can be transferred. The OPC is for the solo founder who already has Tk 25 lakh to put in and turnover above Tk 1 crore; below those thresholds a private limited company with a second subscriber holding a nominal share does the same job with fewer questions at the bank.

The comparison table

Liability and the bank

The single biggest difference is who pays when the business cannot. In a proprietorship and a partnership the owners do, from their houses and savings, with no limit; in a company and an OPC the shareholders lose their shares and nothing else, unless they have signed personal guarantees. Banks know this, which is why a company borrowing from a Bangladeshi bank is routinely asked for the directors’ personal guarantees — limited liability protects you from suppliers, customers, employees and the tax authority, not from a lender who insisted on a guarantee. Where the business carries real risk (construction, food, transport, anything with public contact) or real debt, the company form is not optional. Where it is a consultancy with one laptop, the protection matters less than the compliance cost.

Tax: the comparison nobody does properly

A proprietorship pays tax once, on the owner’s slabs, with the individual threshold and rebates, and the profit is the owner’s to spend. A company pays corporate tax on its profit and the shareholder then pays tax on dividends, so the same profit is taxed twice unless it is drawn as directors’ salary (deductible to the company, taxable to the director). The arithmetic therefore depends on profit level and how much the owners draw: at modest profits the proprietorship or partnership is cheaper; at larger profits, with reinvestment, the company’s flat rate can be lower than the top individual slab. Two further points: company expenses and salaries must be paid through banking channels and carry withholding, which a proprietor often ignores until an audit; and a company’s audited accounts are what make a bank facility, a government tender and a sale of the business possible at all. We run the numbers for clients on their own projections before they choose; the picker above only sorts the structural questions.

Compliance: what each form costs you every year

A proprietorship renews its trade licence and files the owner’s return. A partnership does the same plus the firm’s own return. A private limited company must appoint an auditor, prepare audited financial statements, hold an AGM within 18 months of incorporation and then every year with no more than 15 months between meetings (s.81), file the annual return in Schedule X within 21 days of the AGM (s.36), file Form XII within 14 days of any change of directors, file special resolutions in Form VIII within 15 days, keep statutory registers, and file a company tax return with the audited accounts; the late fees and the Tk 10,000-plus-daily fines for a missed AGM are in our annual return guide. An OPC is spared the AGM but must file its financial statements with the Registrar within the period in s.392I and keep board minutes even with one director. Budget Tk 60,000–1,50,000 a year for a small company’s audit, filings and tax work; that figure, not the set-up fee, is what should decide a small trader against incorporating too early.

Changing later, and the draft 2026 amendment

Moving up is routine: a proprietor or partners incorporate a company and transfer the business to it (assets, contracts, staff and goodwill, usually for shares), re-issuing the trade licence, TIN, BIN and sector registrations in the company’s name; a partnership cannot be “converted” in a single step and neither can a proprietorship. An OPC converts to a private company by adding a member when it crosses the thresholds, and a private company converts to public when it passes 50 members or wants to list. Moving down is harder: a company cannot become a partnership; it is closed by strike-off or winding-up and the business re-started in the new form, with the tax consequences of a disposal. One thing to watch: the draft Companies (Third Amendment) Act 2026, before the government since August 2026, proposes among other things to lower the OPC paid-up floor to Tk 5 lakh and remove the turnover test, to let the Registrar rather than the Court approve objects-clause changes, and to raise the s.11 name-change fines tenfold. None of it is law yet, and we will update this guide when the Act passes; until then the thresholds above are the ones RJSC applies.