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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If you are thinking of setting up a business, it is important to understand the difference between an OPC and a Proprietorship. This will help you decide which type of business to register for, which will suit your needs and provide benefits like limited liability.

An difference between OPC and Proprietorship Incorporating an OPC makes the business a separate legal entity, with its own assets and debt.  A sole proprietorship is the simplest form of business ownership where one individual operates and owns the business. This provides complete control and decision-making to the owner, as well as unlimited profits. However, the downside to a sole proprietorship is the fact that the owner assumes all debt and liabilities of the business and can lose his/her personal assets in case the business experiences a loss.

The One Person Company, on the other hand, provides a separate legal identity from its owner and limits his/her liabilities up to the value of the shares held. Furthermore, if the business suffers a loss, the tax liability is only on the profit earned by the company and not the entire income of the owner.

Another advantage of an OPC is its scalability potential, as it can raise funds and attract investors with ease. It can also facilitate the appointment of professional managers, which may be more effective in driving growth. A sole proprietorship can face challenges when it comes to raising capital and expanding due to its dependence on the owner's own resources and creditworthiness.

Lastly, a sole proprietorship has no perpetual succession as the business ceases upon the death of the owner. On the other hand, an OPC has a nominee that must be mentioned at the time of its registration, who will become the member in the event of the original shareholder's death.

 


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