Conversion of Proprietorship to One person company

Conversion of Proprietorship to One person company

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Conversion of Proprietorship to One person company - Process, Procedure, Document Required, Fees, Eligibility, Duration

A Sole Proprietorship can become a One Person Company (OPC) at any time. Issues like owner liability, firm closure in the event of the owner's death, and so on require the Proprietor to convert the business into an OPC. When a corporation is converted to OPC, it protects the company's assets by limiting the owner's responsibility to the amount of their share. An OPC is a legal structure in which the owner and the business are two independent entities with a nominee acting as a perpetual succession.

A One Person Company is founded by just one person. A Sole Proprietorship, on the other hand, is owned and run by a single person. In a Proprietorship business, the entire operation is reliant on the sole proprietor, who must bear all responsibility and risk on their own.

Sole Proprietorship vs. One Person Company

Legal entity: An OPC is a legal entity but a Sole Proprietorship is not.

Liability: The owner's unconstrained liability is a burden of running a Sole Proprietorship firm while a One Person Company is a separate legal entity with perpetual succession and limited liability.

Owner: In an OPC, the owner and the business are two separate entities while in a Sole Proprietorship, the owner and the business are a single entity.

Nominee: A nominee exists in an OPC but not in a single proprietorship. In the event of the owner's death, an OPC is transferred to the nominee, but a single proprietorship firm shuts in case of the owner's death.

Registration: There is no need to register a Sole Proprietorship company. However, a One Person Company can be registered under MCA and Companies Act, 2013

Legal procedures: There are no legal procedures or paperwork involved in forming a Sole Proprietorship firm. On the other hand, the formation of a One Person Company involves documentation.

Tax: An OPC is taxed under the Income Tax Act for private companies. The tax of a Proprietorship is on his income tax.

Advantages of converting Proprietorship to One Person Company

A Proprietorship that converts to a One Person Company receives several benefits. They are:

  • OPCs are private companies that are registered with the government. As a result, securing funding from financial organizations is easier in the case of OPCs than in the case of Sole Proprietorships.
  • When compared to a Proprietorship, the OPC offers a stronger business structure. As it is a legal entity with proper registration, OPCs provide a better business structure.
  • The owner and the business are two separate entities in a One Person Company. Therefore, there are limited liabilities in the case of OPCs.

Conversion of Proprietorship to One person company - Get Expert Advice

Conversion of Proprietorship to One person company - Get Expert Advice

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Conversion of Proprietorship to One person company Frequently Asked Questions

A Sole Proprietorship that converts to a One Person Company has to submit the following documents: • PAN card • Aadhar card • Passports of directors • Bank statement • Proof of Registered Office Space • Owner's No Objection Certificate • Registered office space's Rent Agreement • Electricity bill • Director's and nominee's passport-sized pictures
A Sole Proprietorship firm can easily be converted to an OPC. By doing the following procedures, one can convert Proprietorship to an OPC: • To begin an OPC, the person must provide his digital signature to the Registrar of Companies. • The individual must come up with a name for his company. • Once the name has been authorized, the director must submit the necessary documentation. • The papers are scrutinized by the Registrar of Companies. • Following successful verification, the proprietor is given a certificate of incorporation. If you want to convert your Sole Proprietorship firm into a One Person Company, you can contact Credence Corporate Solutions, which has a team of specialists who can assist you in changing your Sole Proprietorship firm into a One Person Company.

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