Sole-proprietorship
The simplest form of business carried on by individuals who are personally liable for debts. A sole proprietorship is not a legal entity like a partnership or a corporation. One can start a business by obtaining necessary licenses and tax identification numbers. A sole-proprietor can start a business under his name or under a fictitious name. Costs are nominal to start this kind of business, however, the disadvantage lies with financial failure situation. If the business fails to earn a profit then creditors can file a lawsuit against sole-proprietor. Business liability can be discharged against his personal assets. Moreover, if the owner dies, there are little chances of survival. Expansion of business after a point becomes a tough job. The advantage is this kind of entrepreneurs need not enter into board meetings and annual meetings. Returns are signed under their name. They have flexible working hours.
One person Company (OPC)
The Companies Act, 2013 (No. 18 of 2013) introduced a new form of business, a hybrid of Sole-proprietorship and Company, by providing sole proprietors an opportunity to enter into a corporate world. It is treated as a private company only having a separate legal entity and limited liability. Only an Indian citizen and resident of India shall be eligible to incorporate ‘One person Company’. Nominee for One Person Company shall be an Indian citizen and resident in India. There must be a minimum one director, hence, a shareholder can himself be the sole director. A company may have 15 directors maximum. One person company shall have two Board of Directors meeting in a calendar year and the gap between these two meetings shall not be less than 90 days. A sole-proprietor can incorporate only one company of such kind and can be a nominee in one company. A minor cannot become member or nominee of One Person Company. One Person Company can never be converted into a company meant for not for profit. This company cannot carry Non-banking financial investment activities. They are not required to conduct Annual General Meeting. It loses OPC character if the paid-up share capital exceeds INR 50Lakhs or previous annual turnover exceeds INR 2Crore. It provides assistance to startup entrepreneurs. Annual return shall be signed by Director/Company Secretary. The setting up of OPC requires the lot of time and paperwork.
For more information, Contact LegalRaasta.
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.
The simplest form of business carried on by individuals who are personally liable for debts. A sole proprietorship is not a legal entity like a partnership or a corporation. One can start a business by obtaining necessary licenses and tax identification numbers. A sole-proprietor can start a business under his name or under a fictitious name. Costs are nominal to start this kind of business, however, the disadvantage lies with financial failure situation. If the business fails to earn a profit then creditors can file a lawsuit against sole-proprietor. Business liability can be discharged against his personal assets. Moreover, if the owner dies, there are little chances of survival. Expansion of business after a point becomes a tough job. The advantage is this kind of entrepreneurs need not enter into board meetings and annual meetings. Returns are signed under their name. They have flexible working hours.
One person Company (OPC)
The Companies Act, 2013 (No. 18 of 2013) introduced a new form of business, a hybrid of Sole-proprietorship and Company, by providing sole proprietors an opportunity to enter into a corporate world. It is treated as a private company only having a separate legal entity and limited liability. Only an Indian citizen and resident of India shall be eligible to incorporate ‘One person Company’. Nominee for One Person Company shall be an Indian citizen and resident in India. There must be a minimum one director, hence, a shareholder can himself be the sole director. A company may have 15 directors maximum. One person company shall have two Board of Directors meeting in a calendar year and the gap between these two meetings shall not be less than 90 days. A sole-proprietor can incorporate only one company of such kind and can be a nominee in one company. A minor cannot become member or nominee of One Person Company. One Person Company can never be converted into a company meant for not for profit. This company cannot carry Non-banking financial investment activities. They are not required to conduct Annual General Meeting. It loses OPC character if the paid-up share capital exceeds INR 50Lakhs or previous annual turnover exceeds INR 2Crore. It provides assistance to startup entrepreneurs. Annual return shall be signed by Director/Company Secretary. The setting up of OPC requires the lot of time and paperwork.
For more information, Contact LegalRaasta.
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.
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