What is the difference between an OPC company and Proprietorship Company?
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If you are an entrepreneur looking to start a new venture, one of the first things you will need to consider is the structure of your business. Choosing the right legal structure will have long-term implications for your business. The two most common structures for small businesses are Sole Proprietorship and One Person Company. This article will discuss the difference between these two types of structures to help you make an informed decision about which one is right for your business.
A Sole Proprietorship and OPC are two different types of business structures available to entrepreneurs. Sole Proprietorship is a form of unincorporated business, which means it is not a separate entity from its owner. The owner of a sole proprietorship is fully responsible for all liabilities the business incurs. This type of business is easy to set up and has a high degree of flexibility. However, if you anticipate significant liabilities in your business, it is advisable to register your business as an OPC to protect your personal assets.
One Person Company (OPC) is a hybrid of the Sole Proprietorship and Company form of business. The Companies Act, 2013 introduced the concept of OPC allowing a single individual to incorporate a company as a separate legal entity with limited liability. OPCs require a minimum of one director and are required to hold meetings, but they have less compliance requirements than private limited companies.
Another benefit of OPC is that it allows a sole proprietor to raise funds and grow their business. However, if the company is unable to pay its debts, creditors can claim the owner's personal assets. If you decide to start a business as an OPC, you must have a nominee to take over the company in case of your death.
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