What is the difference between an OPC company and Proprietorship Company?


What is the difference between an OPC company and Proprietorship Company?

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As an entrepreneur, it is important for you to consider the type of business structure that will best suit your goals and objectives. 


While there are many options available, the most common ones include a Sole Proprietorship and a One-person Company (OPC). These two structures seem nearly identical and may be difficult to differentiate at a glance. However, there are some specific differences that distinguish the two. In this article, we'll take a closer look at each of these options and help you determine which is better suited for your needs.

Sole Proprietorship

A sole proprietorship is a form of business ownership that is owned and operated by a single individual. The owner has full control over the business and is responsible for all decisions and operations. This type of structure offers a high degree of flexibility and is easy to set up. However, it is also possible to face considerable liability, as the owner is liable for all losses associated with the business.

OPC

An OPC is a type of private company that requires a minimum of 1 shareholder/member and can have up to 4 directors. OPCs offer several benefits over a traditional sole proprietorship, including limited liability and perpetual succession. However, registering an OPC can be more expensive than a sole proprietorship and will require you to comply with annual reporting requirements.

OPCs are taxed as a company, so their profits are taxable at the corporate rate of 30%* income tax, which is a lower rate than that of a sole proprietorship's 8% gross income tax regime. Additionally, OPCs can deduct their direct costs from their gross revenue before calculating the 40% optional standard deduction.

 

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