Difference between One Person Company and Sole Proprietorship
Difference between One Person Company and Sole Proprietorship
One Person Company and Sole Proprietorship do sound similar but function separately. So if you are opening a business and are confused with which firm to go for here is a complete guide for it.
What is an Open Person Company?
An OPC is a hybrid type of business that offers features of Sole proprietorship and a Private Limited Company. The OPCs are governed under the Companies Act,2013. A One Person Company is treated as a separate legal entity and has limited liability. All the OPCs are required to hold at least one meeting of the board of directors in each half of the year.
What is a Sole Proprietorship?
The Simplest form of business is to be carried by individuals is the sole proprietorships. It is not a legal entity like a partnership or a private limited company. The costs for starting a sole proprietorship are minimal. The advantage is that there is no need to enter the board meetings and the annual meetings. The Proprietorship and the proprietor are considered to be the same legal entity.
Opc vs Proprietorship
| Difference | One Person Company | Sole Proprietorship |
| Registered | Is registered under MCA and Companies Act,2013 | Is not a registered type of entity |
| Legal Status | Separate Legal Entity | The sole proprietorship and proprietor are considered to be one single entity. |
| Liability | The Liability is limited | Unlimited Liability |
| Transferability | Can be transferred to the Nominee | Cannot be transferred |
| Taxation | Taxed as at 30% of profits plus cess and surcharge | Taxed as an Individual. |
| Annual filings | Filed with the ROC | Income tax returns with the ROC. |
| Perpetual succession | Existence if independent of the sole promoter and the Nominee | The proprietorship comes to an end with the retirement of members |
In terms of law and functioning the OPC is different from Sole proprietorship. Though they sound similar One Person Company is treated as a Private Limited Company with limited liability. One Person person company has only one person as a sole promoter of the company and the other is a Nominee who is not supposed to be a minor. The OPCs are required to carry at least one meeting in each half of the calendar and the gap between the two should not be less than ninety days.
A sole proprietor is not a legal entity like a partnership or a private limited company. Also, there is no need to conduct board meetings and annual meetings as the Proprietor owns and controls the sole proprietor. Income and losses are taxed on the personal income tax return. To know more log on to www.indiafilings.com or talk to our experts today.
Post by Mansi Sawant
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