InvestorQ : For my start-up business, what is a better choice; relying on sole proprietorship or can I use the One Person Company Model?
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For my start-up business, what is a better choice; relying on sole proprietorship or can I use the One Person Company Model?

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Anamika Sodhani answered.
12 months ago
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As an entrepreneur looking to float your start-up, the choice of the business structure is very critical. Broadly, there are five structures that you can select from, depending on your specific business needs.

· The first option is a Sole proprietorship model. This is the simplest and the easiest structure to manage in India. If you are looking to have full control of your business, this option is your best bet. Sole proprietorship requires no government registration, hardly any compliance to be fulfilled, limited regulatory paperwork etc. Above all, all profits earned belong to you. You can register a sole proprietorship with just the basic documents like Aadhaar card, PAN card, Bank account, Registered office proof (rental agreement or utility bills) etc. With these basic documents in place, any chartered accountant can help you get a registration certificate. That is all and you are good to go.

· A unique and recent addition (introduced in 2013) is the One-person company (OPC). Until 2013, a single person could not incorporate a company because you needed minimum of two directors for private limited company incorporation. If you are wondering why you would want an OPC structure for yourself, it is about limiting your liability. An incorporated company helps your start-up to limit your liability and also avail certain tax benefits. An individual can incorporate an OPC and be the sole director while retaining 100% ownership and control of the company. More importantly, the OPC entails lesser compliance burden compared to a private limited company. Also the legal structure makes it easier to get legal recognition and bank loans. For an OPC, all filings must be done with the MCA and your chartered accountant can help with the process flow.

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