If you are a single Founder looking to scale your business, then choosing to register your firm could be a great option to make a recognizable status for your entity. In most cases, newly established business owners are perplexed when they choose the best business structure for registering their company. Here’s where a legal filings company could be most instrumental before making a perfect choice.
Although a one-person business (OPC) and a sole proprietorship appear to be quite similar, there are
some key differences between OPC and proprietorship. Based on the details provided by your legal filings partner, you can initiate a deal that most favors the existence of your brand- both in terms of tax savings and growth of the firm. If you are a mid-sized firm that is looking for a registration then you may balance pros and cons between both OPC and Sole Proprietorship to make a decision.
The short answer although is, that sole proprietorship registration is preferable for small firms, while one-person company registration is better for mid-sized businesses. In this article you will explore the differences between the two to see which one best fits your company. But before we identify the bigger benefits of having each of these registrations, take a quick look at a table we have drawn below to help you clear your first level of doubts regarding both registrations.
| OPC | Sole Proprietorship |
|---|---|
|
Separate entity - Here the owner and the company are regarded as two distinct entities. |
Here, a Single entity is used to refer to both the
proprietor and the company. |
|
Here the owner’s liability is limited to only the
investment made by him or her |
Sole Proprietorship offers unlimited liability as both owner and business are a single entity here. |
|
Companies under OPC are taxed as per IT charged similar to Private Limited. |
Here, income generated by the firm will be treated as income generated by the owner. |
The Choice for OPC for a Founder
A one-person company can be registered by a person who has a creative business idea, is looking for venture capital funding, outside investment, long-term expansion and growth, and wishes to benefit from limited liability.
Also, converting a sole proprietorship to a one-person company is a wise business move since a one-
person company is an enhanced and superior version of a sole proprietorship corporation. If you are a single founder, an OPC could be a great bet.
Sole Proprietorship: A bet to play for SMBs
As a single founder and business owner, you will not be required to report somebody or take orders from anyone else. There isn’t any outside interference. Contrary to a corporate firm, where there are little compliance or transparency requirements throughout the entire financial year, a sole proprietorship is one of the simpler business structures.
You also cannot utilize a trademark name that has already been registered. It is a sole proprietorship, not a separate legal entity like other businesses, therefore all decision-making authority will belong to just the proprietors. This feature makes it very convenient for a startup who has just started out.
As a single founder and business owner, you will not be required to report somebody or take orders from anyone else. There isn’t any outside interference. Contrary to a corporate firm, where there are little compliance or transparency requirements throughout the entire financial year, a sole proprietorship is one of the simpler business structures.
The Final Split
OPC and sole proprietorships are significantly dissimilar from one another. In contrast to an OPC registration, a sole proprietorship is not a distinct legal entity. In addition to this, a proprietorship ends with the death or retirement of the member, whereas a one-person company’s existence remains unaffected by directors or nominees.
When planning to scale a business that you are solely running as a founder, the main motive behind
registration should be the growth of the firm and that of business. A legal status of your entity can help you in building a reputation in the market and makes it easier for you and your team to expand geographically.
By balancing both pros and cons of registrations, we could rightfully conclude that an OPC is a good choice for a single founder who does not want to keep the identity same as that of the company. In a sole proprietorship, both owner and the entity share a same status. To understand better about what could possibly be the right choice for you and your entity’s registration, then you may consult our expert and contact us for more information.