Comparison between Sole Proprietor Concern and One Person Company [OPC]

Basis of Comparison	Sole Proprietorship	One Person Company
Independent Corporate Existence	In Sole Proprietorship, there is no separate legal existence from that of its owner.	An OPC possesses its own existence having its separate legal entity from that of its directors or shareholders.   OPC and its shareholder are legally different
Tax Obligation	A proprietary firm is treated as an Individual for purposes of tax computation. Hence, the Proprietor has to pay the tax under slab rate of taxation even for the income from Business.	OPC is corporate entity and hence subject to corporate taxation of 25% + Cess on the taxable revenue.
Annual Compliance	To ensure filing of returns under GST, Income Tax and other labour laws, as applicable.	In addition, Statement of Accounts and Annual Return need to be filed with the Registrar of Companies. In case, the OPC has more than 1 Director – to ensure at least 2 Board Meetings are conducted in a year.   To ensure Directors of the OPC file DIR-3_KYC on an Annual Basis.
Audit of Accounts	Audit of Accounts will be required only if the Turnover exceeds the limits prescribed under Income Tax Act as amended from time to time	An OPC will have to appoint an Auditor to audit the Accounts in terms of Companies Act, 2013 regardless of the revenue. In case revenue exceeds the limits prescribed under Income Tax Act, a separate Tax Audit needs to be done.
Pre-Requisites to start	The Applicant must have valid PAN Card and Address Proof; there are no other pre-requisites for starting a proprietary firm	In addition to having a valid PAN & Address Proof, the applicant must obtain a DSC. And consequently apply for Director Identification Number.
Liability	The most crucial factor is that a sole proprietorship is a non-corporate entity i.e. a single owner, the amount of liability is unlimited. i.e. the personal assets of the proprietor can be attached to recover the dues, if any.	OPC is a corporate entity and enjoys the benefit of Limited Liability. In the case of OPC only one person is holding the entire shares of the company, yet his liability towards the company is restricted to the extent of Capital committed by him and for any default or dues, his personal assets cannot be attached.
Transfer of business	In case of transfer of business, the purchaser will have to re-register the business under GST and other acts. The registrations are not transferable.	Since OPC is company format, the registration are on the name of the Company; and therefore in the event of Transfer – no new registration to be availed.
Protection of Name / Brand Name	Although, there is no law which can prevent any other entity or person to have the same name as the Proprietors Trade Name; The trade name or the Brand Name can be protected by applying for a Trademark to protect the Logo & Name.	In case of an OPC – the name of the OPC will not be made available to any other OPC / Private Limited / Public Limited company; without the express consent of an existing company. However, there is no such monitoring on the non-corporate entities.
Change in the line of Business Activity	If there is change in the line of business activity – the intimation of the same needs to be filed with the Authorities for GST and Firm Registration.	In the event that there is a change in the line of Business Activity, it needs to be informed to the Registrar of Companies [RoC] and only after the approval of RoC can the change be implemented. Thereafter, intimation to be provided to other authorities.
Exit Strategy	Either by way of transfer of business or by liquidating the assets and closure of accounts.   Expected time lag for closure – if all records are properly maintained – less than a month.	The modalities remain the same – assets have to be sold out and accounts to be closed; however since it is a corporate setup – there are certain conditions: a.            For fast track mode – 2yrs of non-operation should have lapsed from date of incorporation. b.            Appoint a Liquidator for winding up.   Under both these options the time lag is long

 

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