What is the difference between OPC and sole proprietorship
Most entrepreneurs who have only recently launched their companies are in a dilemma when it comes to deciding the appropriate business structure to register their companies. One-person companies (OPC), as well as sole proprietorships, appear to be similar however, specific differences are listed below. It is possible to choose the most appropriate company structure by taking the details.
If you're launching the business and are eager to have full control over it, there are two options One-person business (OPC) and a sole proprietorship. As you'd imagine, each has advantages and disadvantages however, it is impossible to claim that one is superior to the other with only one slight distinction.
The simple answer is that Person Company registration is a better choice for medium-sized businesses and sole proprietorship registration is ideal for small companies. Let's take a look at the distinctions between these two and determine which one suits your company better.
One Person Company
Separate entity: the owner and
the company are seen as separate entities.
Limited liability - the owner's
liability is limited to the participation in the business.
Taxation of companies - the
one-person firm (OPC) has been registered as a limited private business and is
therefore taxed under the Income Tax Act for private corporations.
Succession A designated nominee
could be appointed to lead the business should there be the demise of a
management member. The nominee must be an Indian citizen and an Indian
resident. India.
- The company registration adds
credibility to the organization
- It is easy to obtain money or
loans for the business since lenders will trust the business that is
registered.
- Perpetual succession
- If the owner is unable to
continue running the business or dies, the nominee may assume the business
Sole
Proprietorship
- One entity - the owner and the
business are regarded as an individual entity.
- Unlimitable liability - since the
owner and the business are one entity, if the company suffers losses, the
proprietor is liable for the entire amount of it.
- Income tax - any income earned by
the company is considered to be the income of the company's owner, therefore,
taxed as a person's income.
- Succession in the case of sole proprietorships the business will cease
to exist after the death of the owner since they are both considered an
entity. Therefore, succession is only able to occur through the signing of
the final testamentary will and testamentary power of the proprietor when the
owner transfers ownership to another individual.
Annual compliances
A
sole proprietorship only has to file an ITR and keep its books of accounting. In addition, the
one-person business (OPC) should also get its books reviewed, submit annual
reports and inform the RoC when there are any changes made to the structure. OPC should invest at a minimum of the equivalent of Rs. Ten thousand for compliance.
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