What is the most suitable type of Business Registration for a single person to start in India?

Business Registration for a single person to start in India

A single person has choice of two types of business registrations that are 1) Sole Proprietorship and 2) One Person Company. Both of the business structures are substantially different from each other thus a person must understand key facts related to both types of business structure while choosing the business structure. For example, if the person wants to enjoy the limited liability of OPC then he must incorporate the OPC while the person wants to start the business with low investment and less compliances then he must always choose the Sole Proprietorship.


What is Sole Proprietorship?

Sole Proprietorship is a business structure which is operated by single person and the proprietor shall be personally liable for its debts as it is not a separate legal entity.


What is One Person Company (OPC)?

One Person Company is a private limited company having one member and is managed through its director/directors. The member can also become the director of the company. The concept of OPC was rolled out in the Companies Act, 2013 and since then it has become the most preferable business structure for single person willing to start a business.


Sole Proprietorship v/s One Person Company


Sole Proprietorship

One Person Company


Not mandatory. It can get registration under –

1.     Shop & Establishment Act

2.     CGST Act, 2017

Mandatory to get registration with the MCA under the Companies Act, 2013


Generally it is on the name of the proprietor

Mandatory to use the word “OPC” in its name

Separate Legal Entity



Liability of owner/member

Unlimited Liability

Limited Liability


No, as the Business ends upon the death of the proprietor

Yes, the company is run by the nominee appointed at the time of incorporation

Income Tax Liability

Income of Sole proprietorship is treated as proprietor’s income. Thus, it is taxed as an individual’s income


OPC is taxed as a private limited company.


It is only required to get accounts audited as per the section 44AB of the Income Tax Act, 1961 when the turnover of the business exceeds the prescribed limit.

There are various company compliances prescribed by the Companies Act, 2013 such as to file Annual Returns, statutory audit and so on and the OPC is mandatorily required to

comply these compliances.


It is wholly & solely managed by the Proprietor only

It is managed through its Directors (Minimum 1 – maximum 15)


Comparatively low

Comparatively high



Choosing the most suitable business structure is the most important step for starting a business. This is why it is always suggested to seek assistance from experts for choosing the suitable business structure.

If you require any such assistance then contact your Trustworthy Advisors Manthan Experts for registering your business.

Click Here To Incorporate Your Company

Knowledge Source:

What is the difference between a Private Limited Company and a Section 8 Company ?

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