Which company type One Person or Sole Proprietorship?

Posted by Vivek Mishra on March 13, 2019

One Person Company means Person and business are different entity ,sole Proprietorship is Type of enterprise which is owned and run by one person and also in which there is no legal separation between the owner and the business entity.

Ownership

In one person company,single person can have authority it depends on he/she are themselves are simultaneous shareholder and director , while in proprietorship a proprietor have sole authority over any decision

Requirements for registering

  • For one person company
  • Minimum 1 Shareholders
  • Minimum 1 Director
  • One Nominee
  • Director & shareholder can be same person
  • Minimum Share Capital shall be Rs.100,000

There is no minimum requirement in case of a sole proprietorship while you need to be indian citizen to start proprietorship

Annual Return:-

One Person Company Taxation Rate

  • The income of the One person company is taxable at the flat rate of 30%
  • If the turnover of the company is Rs. 1 crore or more then surcharge will be levied on the tax paid by the company at the rate of 5%
  • Cess is also applicable, 2% education cess and 1% secondary higher education cess i.e. 3% effective rate of cess
  • Provision of MAT (Minimum Alternative Tax) is applicable on OPC. MAT is a minimum tax which has to be paid by the company on books profit irrespective of the tax paid on income or not.
  • The provision of DDT (Dividend Distribution Tax) is also applicable on OPC, distribution of dividend attract the dividend distribution tax.

In sole proprietorship only filing of income tax return is required.The income of the sole proprietorship is included with individual’s income and taxed accordingly in the hands of sole owner of the company.

Funding

One person company act as separate identity as business which make it likable to get funding and loans for business development , opc provide security to business loan and investment provider for having structured cash flows and security .
while as a sole proprietor you and your business are not separate meaning your personal bank statement matter

Privacy

In case of one person company , your company info in public view,while for sole proprietor firm there is no such case .

Easy to convert

To convert OPC into a Private limited company or Public limited company, a minimum 2 years must pass except in specified case as given in Act
No minimum period mandatory to convert a sole proprietorship firm to any other company type .