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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Selecting the appropriate legal structure for your business is one of the first decisions to be made by an entrepreneur. The structure you choose has an impact on various aspects of your business including taxation, liability concerns, growth potential, etc.
An difference between OPC and Proprietorship Incorporating an OPC makes the business a separate legal entity, with its own assets and debt. A OPC or One Person Company is a type of incorporation that offers you the benefits of a corporate entity, limited liability and a structured way to raise funds. It also allows you to register your business with a GST number, get bank accounts and other services that require registration under the Shops and Establishments Act.
A key difference between an OPC and a sole proprietorship is that the former has a separate legal identity, whereas the latter does not. This means that if you suffer losses in your business, your liability is limited to your investment in the company, while in a sole proprietorship, your personal assets are at risk.
The other key difference is that an OPC can be run by a single person as its sole owner and director. This gives you the freedom to hire employees and take a more hands-on approach to management, while still enjoying the advantages of being a corporation.
Another consideration when choosing an OPC is its ability to scale and attract investors. As an OPC, you will be able to raise funds more easily through loans and venture capital investments because you will have the benefit of a corporate image and structure that is easier to work with for financial institutions.
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