How is (OPC)One Person Company different from Sole Proprietorship?
The conception of One Person Company permits a single person to run a company limited by shares. In case of sole Proprietorship body, there is no difference between owner and the business. It is run and owned by one individual. In case of One person Company, the owner and the business are observed as two different organization whereas in case of Sole Proprietorship the owner and the business are characterized as a single organization.
The owner’s liability is limited to his or her investment in the company in a One Person Company (OPC). The liability is unlimited in the case of Sole proprietorship. If there is a loss in the organization then the owner is liable for all the loss. A OPC is registered as a Private Limited Company hence tax has to paid under the Income Tax Act based for private companies. In the situation of tax payment for a Sole proprietorship, the tax is based on an individual’s income, as the income generated by the company is treated as the owner’s income.
On the death of a member of the One Person Company, a nominee can be allocated to run the company, who should be a Indian Citizen an a resident of India. In the case of Sole Proprietorship, with the death of the owner, the business ends there. However, ownership can be passed only with the Will of the owner, if he had executed such Will.