What is the Difference between an OPC and Proprietorship?
What is the Difference between an OPC and Proprietorship?
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The type of business structure an entrepreneur selects has far-reaching implications for operational efficiency, taxation, and liability. It's important to consider each option carefully before making a decision.
A Sole Proprietorship and OPC are two different types of business structures available to entrepreneurs. While both structures seem similar in some aspects, they are quite different in terms of functioning and legal identity. This article will shed light on the unique characteristics of each to help entrepreneurs make informed decisions when selecting the appropriate structure for their ventures.
The primary difference between an OPC and a sole proprietorship lies in the fact that an OPC is a separate legal entity with limited liability, while a sole proprietorship has unlimited liability. Additionally, an OPC can have perpetual succession while a sole proprietorship does not.
One Person Company (OPC) and Proprietorship are two distinct facilities designed to accommodate entrepreneurs who wish to operate their businesses on a small scale without the need for partners or investors. However, they differ from each other in a number of key areas including legal identity, liability, and ownership.
Moreover, an OPC has a formal corporate image and can issue shares to raise funds whereas a sole proprietorship cannot. This can be beneficial for an entrepreneur when dealing with clients or investors who prefer to work with incorporated entities. OPCs also have more compliance obligations than sole proprietorships, resulting in higher costs and administrative burden. To start an OPC, the shareholder or member must submit documents such as the Memorandum and Articles ofAssociation, Form INC-2 within 60 days of incorporating the company, an ID proof and address proof of the nominee, his/her consent, and an affidavit from the share subscribers in form INC-9. The company must also file the required annual returns and get its accounts audited annually.
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