What is the difference between an OPC company and Proprietorship Company?

What is the difference between an OPC company and Proprietorship Company?

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One Person Company is a special type of private limited company that can be set up by only one shareholder or director (a private company can have up to 50 shareholders). It's a separate legal entity and can take on debt, own assets, and conduct business in its own name. It also offers limited liability to the shareholder or director, which means that his or her personal assets are protected in case the business incurs losses.

An difference between OPC and Proprietorship Incorporating an OPC makes the business a separate legal entity, with its own assets and debt. A One Person Company can be registered by any individual who has a creative business idea and is looking for venture capital funding, outside investment, long-term growth, and the benefits of limited liability. However, the key difference between an OPC and a sole proprietorship is that an OPC must comply with various regulations and filings to ensure its continued success.

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.

An OPC can convert into a private or public limited company, based on the decision of its members, when its average sales or turnover crosses Rs. 2 crore or its paid-up share capital crosses Rs. 50 lakh. However, a sole proprietorship has no such restrictions and can continue as a sole proprietorship even if it exceeds these thresholds.

 

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