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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Are you looking for a legal structure that can protect your personal assets from lawsuits and debts? Then, you should consider registering an OPC (One Person Company). This is the most popular form of business among entrepreneurs. It is a hybrid between a sole proprietorship firm and a private limited company. Moreover, it is easy to set up and requires less compliance.

The main difference between an OPCand Proprietorship Company is that a One Person Company has a separate legal identity and offers liability protection to the owner. The owner of an OPC has the benefit of being able to obtain loans easily since his or her personal assets are protected.

Moreover, an OPC is required to have a nominee on its board for the purpose of succession in case of death or incapacitation. The nominee has to be a natural person who is a resident of India. In order to form an OPC, you need to provide a DIN, DSC, PAN and other documents as stipulated by the Companies Act, 2013.

It is also important to note that an OPC has to convert into a private or public limited company once its average turnover for three years exceeds Rs. 2 crore or its paid-up share capital crosses Rs. 50 lakh. This is different from a sole proprietorship that can continue to operate as a sole proprietorship even after it reaches the above-mentioned criteria. Furthermore, an OPC must abide by the requirements of filing returns and maintaining records as prescribed under the Companies Act.

 

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