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One Person Company V. Sole Proprietorship


In the era of globalization the world is changing rapidly, in the terms of business everyone wants to start up their own companies with their own unique ideas but due to some reasons they think doing business as a sole proprietor is an old fashioned job & thus they drop their idea to start a business. Companies Act, 2013 came up with a unique section which allows individuals to start their own co. i.e. OPC (one person companies). In international market India is one of the fastest growing nations as everyone is seeking and adopting opportunities to grow themselves.

Whenever we hear the word Sole proprietor we think that a guy is sitting in a shop on the street or in market and selling goods or services to their customers but that’s not completely true, but in our modern era this policy doesn’t want to work anymore. Now a day’s individuals want to open their own business and instead of sole proprietors they want to be called as entrepreneurs
& with the new Companies Act, 2013 youth is now able to fulfil their dream, but is it really helpful?

Everything in our world has both good and bad effects; sole proprietorship is traditional form of doing business as compared with OPC. We will discuss this in some short columns of Scope, functions and legal compliance.



➢  Firstly, One cannot see sole proprietor to aim for a higher goal as technically they can’t achieve one Secondly, expansion of the business beyond a certain point becomes very tough as since the proprietor cannot be an expert in every aspect of business management more employees are needed. Moreover the business ends when the owner dies.
➢  One Person Co. is made so that a person can do business at any level and can aim for

higher goals also without facing any difficulties as OPC already serves the purpose of completing all the formalities.
➢  One Person Co. and the individual are two different entities so even if the owner dies

the co. will still be run by the nominee appointed earlier, thus OPC never dies.


➢  Sole proprietorship is easy to run & manage. Full profit of the business will be of the owner only. Sole proprietors can do business in their own way and no one will tell them how to do things. Thus the government also allows various things under which their tax
will be reduced to some extent.

➢ Sole proprietors can start their business with a very low capital and thus it is not mandatory for them to get their business registered unless it comes into the lime light.
➢  One person companies can enter easily into any kind of business or services approved by the government, the director (owner) can also appoint a person on his behalf and also appoints a nominee in case the director dies. One person companies never dies
unless it is dissolute under the Companies Act, 2013.


➢  Sole proprietorship obviously deals with less legal matters as compared to OPC but if the business reaches to the higher level the legal technicalities starts arsing such as VAT, sales tax, TIN no. & other things also.
➢ The income generated from the sole proprietorship will add into the income of the owner and thus taxable under his slab rate accordingly.
➢  One person companies is an entirely different entity from the individual as the working remains separate and the director of the companies has limited liability upto the extent of the assets of the companies.
➢ The revenue generates from the OPC will be taxed at the rate of 30% only & no subsidies will be allotted to the companies.
➢  One person companies allows a single individual to start his own companies and issues shares in the market to increase its capital as to start OPC the minimum share capital is Rs. 1,00,000/-.

One Person Co. & sole proprietorship both have its own benefits and losses; an individual can chooses among them according to its need and dreams. If a individual wants to grow more and more and also has money to invest than he will adopt OPC but if he does not have any capital to invest then he will adopt sole proprietorship.

“There are various things which need to be examined before adopting anything as both of them works in an entirely different manner and needs different business tactics to expand.”


Submitted by LP Team

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