Simply, there is no formal way of converting a sole proprietorship firm into an OPC. You just have to apply for a fresh registration. Therefore, the steps would be same as starting a fresh One Person Company.
To start an OPC, there has to be two people, one is the director/owner and other is the nominee. The steps are as mentioned below:
1. The person willing to start an OPC has to submit his digital signature to the Registrar of Companies.
2. The person selects a name for his company and check if the name is available. The name should comply with the guidelines of Ministry of Corporate Affairs. The owner can submit six names and can assign their priority. The name would be allotted according to the priority and availability. The name must contain at least two words, one is the name of the company and other is the nature of business.
3. Once the name is approved, the director has to submit several documents such as Memorandum of Association and Article of Association. Also, he has to submit an address proof for the office.
4. The documents are examined by the Registrar of Companies, and on successful verification, the owner is handed over a certificate for his incorporation.
TYPE OF COMPANY BASIS |
Proprietorship |
One Person Company |
Registration |
Not Compulsory |
Can be registered under MCA and Companies Act 2013 |
Legal status of entity |
Not considered as a separate legal entity |
Separate legal entity |
Members liability |
Unlimited liability |
Limited to the extent of share capital |
Minimum number of member |
Sole Proprietorship |
Minimum number of 1 person |
Maximum number of members |
Maximum 1 person |
Maximum 2 person |
Foreign ownership |
Not allowed |
Allowed if one is the director and other is the nominee. Both the director and the nominee cannot be foreign citizens |
Transferability |
Not allowed |
Allowed to 1 person only |
Survival |
comes to end on death or retirement of the member |
Existence is independent on directors or nominee |
Taxation |
Taxed as an individual |
Tax rate is 30% on profits plus cess and surcharge |
Annual filings |
Income tax returns with the registrar of the company |
Filed with the registrar of the company |