ONE PEROSN COMPANY
One person company was introduced by the companies act 2013. It is consist of single ownership as well as corporate structure considering separate entities of the owner and the business. It allows a single person to run a company limited by his/her share. It’s a new form of a business hybrid sole proprietorship and a company, encouraging and appreciating the talented entrepreneurs to start and run their own venture. The intent of the government is to bring the traditional small proprietors who are currently working in un-organized sectors in an organized form of business to enhance corporate governance and inculcate a habit of formal business structure.
SOLE PROPRIETOR SHIP
Sole proprietorship is owned by a single person who solely owns the business and responsible for all the liabilities of his business. The owner is recognized as the same entity as the business. It is known as one man business organization. a sole proprietorship usually does not have to be incorporated or registered. Thus, it is the simplest form of business structure and the ideal choice to run a small business or medium scale business.
|BASIS OF DISTINCTION||SOLE PROPRIETORSHIP||ONE PERSON COMPANY|
|Registration||registration is not mandatory for sole proprietorship, but the applicable regional licenses are required for any particular business||In opc registration is mandatory with MCA|
|Entity||no separate legal entity||separate legal entity|
|liability||unlimited liability||Limited liability to the extent of share capital|
|Minimum members||Sole Proprietor.||Minimum number of 1 person is essential.|
|Maximum members||maximum 1 person||maximum 2 person|
|nomination||optional||mandatory nomination of 1 natural person to from an opc.|
|directors||not applicable||minimum number of director 1 and maximum no. of director can be 15 unless increased|
|type of structure||sole form||corporate structure|
|income tax compliances||income generated by sole proprietor firm shall be treated as income of the proprietor of that firm and such income shall be taxed accordingly||one person company is registered as a private company. These types of companies are taxed under the income tax.|
|goodwill||not impressive because no separate legal status||good because an opc has separate legal status and is considered as a company under companies act 2013|
|recommended for||unorganised sector||opc recommended for every entrepreneur|
|liquidation||Death of the proprietor ends his business.||share can be transfer to nominee, In the event of the shareholder death or incapacity to contract, the Nominee shall become the member of that OPC.|
|differences in name||legal name same as on pan card, trade name but avoid trademarks and no need suffix.||A unique name is required in an opc company which is not the name of any other company and need to suffix (opc) pvt. Ltd.|
|Audit Requirements||Accounts to be Audited by a Chartered Accountant only if the turnover exceeds Rs.1 Crore.||Accounts to be Audited by a Chartered Accountant whether the company does any business not.|
Sole Proprietorship and one person company are very different from each other but both these forms of business structures have their own benefits and risks involved. Before starting any business, we should know its requirement so that we can decide the structure of a business.