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December 13, 2022
Sole Proprietorship VS OPC – A Comparison Between two important Organisation in India
Sole Proprietorship and OPC are two different business structures. OPC is governed by the Companies Act governed by two different acts namely the Companies Act and Shop and Establishment Act respectively. The concept of One Person Company encourages single and enthusiastic entrepreneurs to operate their own ventures. However, A Sole proprietorship is a form of business in which one person owns all the assets of the business, in contrast to partnerships or corporations.
Do you want to start a new business but have confusion as to what structure of the business you should choose? This article might help you to ease your decision.
What is the meaning of OPC and Sole Proprietorship?
One Person Company means a company that has only one person as to its member. An OPC is effectively a company that has only one shareholder as its member.
A sole proprietorship also referred to as a sole trader or a proprietorship is an unincorporated business that has just one owner who pays personal income tax on profits earned from the business
Comparison between OPC and Sole Proprietorship
There are a few similarities as well as a few differences between the OPC and Sole Proprietorship. Let us discuss both here for your better understanding.
Know the benefits of One Person Company
OPC Vs Sole Proprietorship: A Quick Comparison Table:
| Particulars | OPC | Sole Proprietorship. |
| Law Applicable | Companies Act 2013 | Shop and Establishment Act |
| Separate legal entity | Yes | No |
| Minimum share capital | No requirement for minimum share capital. If capital exceeds 50 lakhs, OPC gets converted to Pvt. Ltd. | No requirement for minimum share capital |
| Members required | Minimum one
Maximum one |
Only one |
| Directors required | Minimum one
Maximum 15 |
NA |
| Board meeting | One meeting in each half of the year. The gap between the two meetings must be at least 90 days | NA |
| Statutory Audit | Compulsory | No obligation for Statutory Audit until gross turnover exceeds 100 lakhs |
| Annual Filing | Financial Statements and Annual returns to be filed with the registrar | NA |
| Liability | Limited | Unlimited |
| Transferability of shares | Can be made by altering MOA | NA |
| Foreign Direct Investment | Not eligible for FDI | No allowed |
| Suitable to which type | Individuals whose capital requirements are 50 lakhs and turnover is less than 2 crs. | Small traders and merchants. |
| Company Name | Should end with (OPC) Pvt. Ltd./ (OPC) Ltd. | Any name can be given. |
Conclusion:
One Person Company and sole proprietorship have a lot of similarities yet they both are different in many of their characteristics and structures. If you are one person who wants to start a business One Person Company is definitely for you as the concept of One Person Company (OPC) was introduced with an objective to encourage single and enthusiastic entrepreneurs to operate their own venture. And in the case of a sole proprietorship, it is an unincorporated business with only one owner who pays personal income tax on profits earned.
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