What is the Difference between an OPC and Proprietorship?



What is the Difference between an OPC and Sole Proprietorship?

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One of the biggest hurdles for many aspiring entrepreneurs is choosing the right business structure for their venture. While the two popular options, namely, OPC and Sole Proprietorship may appear similar, they have distinct differences that need to be considered. This article aims to shed light on the key differences between OPC and Sole Proprietorship to help you make an informed choice for your business.

A Sole Proprietorship and OPC are two different types of business structures available to entrepreneurs. OPC is a hybrid form of business that incorporates features of Sole Proprietorship and a Company. It was introduced with the passage of new Companies Act, 2013 and allows a sole proprietor to step into the corporate world by registering their business as OPC. The OPC is treated as a separate legal entity with limited liability, and mandatory meetings are required to be conducted at least twice in a year.

In the case of OPC, the businessman's liability is only up to his share capital contribution/assets, whereas in Sole Proprietorship, the business owner's liabilities are unlimited. Also, the assets of a Sole Proprietorship are not separated from his personal belongings hence the owner can be held liable for losses incurred by the business.

The main reason for opting for OPC is the limit on liability which provides financial security and peace of mind to the owner in case of any loss. In addition, in case of death or incapacity of the OPC owner, it is possible to nominate another person to continue the operations of the business. To start an OPC, the shareholder or member must submit documents such as the Memorandum and Articles ofAssociation, Form INC-2 within 60 days of incorporating the company, an ID proof and address proof of the nominee, his/her consent, and an affidavit from the share subscribers in form INC-9. The company must also file the required annual returns and get its accounts audited annually.

 

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