Sole Proprietorship

A single individual own and manages sole proprietorship business. Sole proprietorships attract small investors as they are moderately easy to start. Also, the owner is allowed to get all the profit that the sole proprietorship acquires but the business owner is directly responsible for any debts, losses or violations that took part in the business. For example, if the business has to pay any debts, these will be cleared off from the owner’s own personal funds and also business does not run if the owner becomes expired or injured as they are treated as one and the same.

One Person Company

Starting a One Person Company removes aforementioned issues and offers enhanced advantages for the small businessmen, traders and entrepreneurs since the registration and maintenance cost for the company is least. Incorporation of business as a One Person Company would make it a Separate Legal entity with continual succession and also with restricted liability. A One Person company (OPC) can be registered with a single individual as a director cum shareholder. One person company offers enhanced advantages as compared to proprietorship like legal Status, limited liability, and corporate identity, flexible in management, quick decision making, reduced taxation burdens and easy bank operation.

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Advantages of One Person Company over Sole Proprietorship

In connection with sole proprietorships, the proprietor and the business are one and the related to law and in your dealings with society. In spite of the fact that you have the advantage of enhanced self-governance over the business and its activities, you are financially and legally in charge of all risk associated with the business, such as obligations and claims.

A few things to see while converting Proprietorship to One Person Company

Difficulty of Compliance

One Person Company will need to follow procurements applicable to private limited companies with different exclusions and thus it is compulsory to stick to less compliance associated burden.

Simple to obtain Loan from Banks

Banking and financial institutions choose lending money to the company rather than proprietary firms. In a large part of the scenarios, the entrepreneurs convert their firm into a Private Limited company before sanctioning funds. So it is recommended to register your start-up as a One Person company as compared to proprietary firm.

Annual return filing

Yearly return of One Person Company is needed to be signed by a director. The essential need of Company Secretary Signature is not pertinent to One Person Company.

Persistent Sequence

Being an incorporated entity a One Person Company will suppose to have the section of continuous succession and will make it easier for entrepreneurs to increase capital for business. The One Person Company is an artificial unit from its proprietor.

No need to organize annual or Extra Ordinary General Meetings

Just the resolution might be passed by the member from the organization and entered in the minutes book and signed and dated by the member and such date should be regarded the date of meeting.

Board Meeting

A One Person Company is needed to carry out only one meeting of the Board of Directors in each half of a calendar year and the gap between the two meetings should not be less than 90 days.

Process to convert a Sole Proprietorship into One Person Company

 Step 1 – DIN – Getting Director Identification Number

 Step 2 – DSC – Obtaining Digital Signature Certificate

 Step 3 – Company Name – Filing application for name approval

 Step 4 – MOA and AOA – Preparing Memorandum of Association and Articles of Association

 Step 5 – Filing E-Forms – Signing and Filing different documents that includes Memorandum off Association and Articles of Association in various E-forms regarding companies

 Step 6 – Certificate of Incorporation – Receiving of Certificate of Incorporation from Registrar of Companies

Essential Documents

Address Proof – Most up-to-date Utility bill / Bank statement in the name of director and nominee that should not be older than 2 months

Proof of Identity – Scanned copy of PAN Card of all nominees, directors and Voter ID/Aadhar card/ Driving License /Passport

Approval of Nominee – Written approval of nominee is needed to be filed with the Registrar of Companies (RoC)

Proof of Registered Office – No Objection Certificate (NOC) from the proprietor, utility bill (last 2 months) and notarized rent agreement (in the case of rented property)/ registry proof or house tax receipt (in the case of owned property)

Passport Photograph – Most recent passport sized photograph of the directors and nominee.