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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Choosing the appropriate business structure for your company is one of the most crucial decisions you need to make as an entrepreneur. There are various parameters that need to be analysed before selecting the right business structure for your company. These include – Formation and legal status, Taxation, Risk on personal assets, Startup advantages, Attracting Investments, Tax Compliances etc.
A Sole Proprietorship and OPC are two different types of business structures available to entrepreneurs. Both are similar in many ways and have their own perks. However, the major difference between OPC and Proprietorship is in terms of Liability.
The concept of one person company was introduced by the new Companies Act, 2013 to provide a middle ground between sole proprietorship and private limited companies. It provides a separate legal identity and limited liabilities for its owner, which can enter into contracts, own assets and incur liabilities under its name. It is a hybrid type of business, and the same individual can be a member, shareholder and director of the OPC.
It is also a good option for individuals who are interested in starting their own company, but do not want to commit the time and resources required for registering a private limited company. Moreover, an OPC can be converted into any other kind of company, such as a private limited or a LLP, provided that it follows the necessary legal requirements. The shareholder or nominee of an OPC must also be a natural person and be an Indian resident. Besides, the OPC can also take advantage of the benefits offered by the Start-up India program.
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