Sole proprietorship vs OPC
Here are the notable distinctions between an OPC (One Person Company) and a sole proprietorship:
Legal Structure:
OPC: An OPC is a legally recognized entity that is registered under the Companies Act. An OPC (One Person Company) is recognized as an independent legal entity distinct from its owner.
Sole Proprietorship: A sole proprietorship does not have a separate legal identity. In a sole proprietorship, there is no legal distinction between the business and the owner—they consider as a single entity.
Ownership:
OPC: An OPC owns by a single individual who acts as both the director and shareholder of the company.
Sole Proprietorship: In a sole proprietorship, the business owns and manages by a single individual.
Liability:
OPC: The liability of the owner in an OPC is limited to the extent of the capital invested in the company. The personal assets of the owner generally safeguards from the company’s liabilities.
Sole Proprietorship: In a sole proprietorship, the owner assumes unlimited personal liability. This means that the owner is personally liable for all the debts and obligations of the business and their personal assets may be at risk.
Compliance Requirements:
OPC: An OPC has more stringent compliance requirements compared to a sole proprietorship. It must maintain proper accounting records, conduct annual audits, and file annual returns with the Registrar of Companies (RoC).
Sole Proprietorship: The compliance requirements for a sole proprietorship are relatively simpler. Because, The owner is responsible for maintaining business records and fulfilling tax obligations.
Continuity:
For more information visit this site: https://www.mca.gov.in
OPC: An OPC has better continuity as it can continue to exist even if the owner resigns, dies, or becomes incapacitated. It can transfer to another person as per the provisions of the Companies Act.
Sole Proprietorship: The continuity of a sole proprietorship is closely tied to the owner. If the owner decides to discontinue the business or passes away, the sole proprietorship typically ceases to exist.
Understanding these differences can help individuals choose the appropriate business structure based on their specific requirements and objectives. Consulting with a legal professional or business advisor recommend to ensure compliance with relevant laws and regulations.
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