Both Sole Proprietorship and One Person Company have one owner.
However, there are some differences between the two.
Following are the differences between Sole Proprietorship and One Person Company (OPC)
Formation-
Sole proprietorship is easier to be formed than OPC .
In case of OPC, formation involves some legal formalities. Hence, slightly longer time is required for formation of OPC as compared to sole proprietorship.
Registration-
In case of Sole Proprietorship, it is not compulsory to get the firm registered.
It is mandatory to get One Person Company (OPC) registered.
Legal identity-
The legal identity of the sole proprietor(owner) is not separate from the firm. In eyes of law, sole proprietor and his business are not seperate. Law considers sole proprietor and his business as one and the same entity
The legal identity of OPC is distinct from the member (owner). In eyes of law, the owner and the business are two different entities.
Life of the Business-
In case of sole proprietorship, business comes to end with the life of the sole owner.
OPC enjoys perpetual succession. Business does not come to an end with death of the owner. An OPC needs to have a nominee for the business who has to be named at the time of formation of the company. In case of death of the member (sole owner/ sole shareholder), the business is passed on to the nominee.
Liabilities-
The liability of the owner is unlimited in case of sole proprietorship. The personal assets can also be used to pay off business debts/liabilities
The liability of the owner is limited. The personal assets cannot be used to pay off business debts/liabilities
Nominee-
No nominee is required in case of sole proprietorship.
Nominee is mandatorily required in case of OPC. He/she is reffered to as Nominee Director
However, there are some differences between the two.
Following are the differences between Sole Proprietorship and One Person Company (OPC)
Formation-
Sole proprietorship is easier to be formed than OPC .
In case of OPC, formation involves some legal formalities. Hence, slightly longer time is required for formation of OPC as compared to sole proprietorship.
Registration-
In case of Sole Proprietorship, it is not compulsory to get the firm registered.
It is mandatory to get One Person Company (OPC) registered.
Legal identity-
The legal identity of the sole proprietor(owner) is not separate from the firm. In eyes of law, sole proprietor and his business are not seperate. Law considers sole proprietor and his business as one and the same entity
The legal identity of OPC is distinct from the member (owner). In eyes of law, the owner and the business are two different entities.
Life of the Business-
In case of sole proprietorship, business comes to end with the life of the sole owner.
OPC enjoys perpetual succession. Business does not come to an end with death of the owner. An OPC needs to have a nominee for the business who has to be named at the time of formation of the company. In case of death of the member (sole owner/ sole shareholder), the business is passed on to the nominee.
Liabilities-
The liability of the owner is unlimited in case of sole proprietorship. The personal assets can also be used to pay off business debts/liabilities
The liability of the owner is limited. The personal assets cannot be used to pay off business debts/liabilities
Nominee-
No nominee is required in case of sole proprietorship.
Nominee is mandatorily required in case of OPC. He/she is reffered to as Nominee Director
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