Q: What is the difference between one person company and sole proprietorship ?

Ans: In simple words, it is one man business organization. All the assets of the business and profit generated out of business are owned by sole proprietor.

The advantage of sole proprietorship is complete control and freedom to make quick decisions regarding the business. There is no sharing of profits.

A significant disadvantage is unlimited liability. He can have access to limited capital. A single person can not be expert in every sector of business.  This leads to limited managerial liability.

Section 2(62) of the Companies Act, 2013 defines a 'One Person Company' as a company which has only one person as a member. Simplifying thereof, a 'One Person Company' can be formed by only one member and one director. Importantly, the member and director can be the same person.

One Person company is mentioned under Section 2(62) of company act, 2013 whereas sole proprietorship is mentioned under shop and establishment act of state. 

Comments

Post a Comment

Popular posts from this blog

Q: Can a private company be company limited by shares ?

Question 1: Rajiv owns a garments shop with his two brothers. They decided to diversify its business by creating a company that will manufacture garments. They are facing some financial difficulties in this regard. For example, they collectively have just Rs. 80,000 as capital. Furthermore, they wish to limit their liabilities because of such financial shortcomings. Can they form a private company under such conditions? Answer: Rajiv and his brothers can definitely incorporate a company under such conditions. Although the Companies Act had previously prescribed a minimum capital requirement of Rs. 1 lakh, this is now omitted. Considering the second condition, they can opt for a company limited by shares or guarantee. Both company limited by shares or company limited by guarantee limit the liabilities.  
Read more

Q: How does the company work as an assessee?

Ans:  The main source of income for the government is tax collection. Under section 2(7) of the Income Tax Act, 1961 , an assessee is a person or company who is liable to pay taxes to the government under the provisions of this act.  To assess means to evaluate.  So, the assessee is a person who has been evaluated for his income as well as for other's person income, for which the assessee will be assessable for the profit and loss experienced by that person. According to the Income Tax Act, they are classified into the following categories: Normal assessee: A normal assessee is a person who will be responsible to pay taxes on his income generated in the fiscal year.  Assessee representative: In the case of a non-resident, juvenile or lunatic person, an another person who will be responsible for paying taxes on income or losses will be the assessee representative.  Deemed representative: Any person who is regarded to be an assessee and pay taxes on behalf of anot...
Read more

Q: How many independent directors are required by public company ?

Ans:  According to section 149(4) of companies act, 2013, every listed public company shall have at least one-third of the total number of directors as independent directors  and the Central Government may prescribe, the minimum number of independent directors in case of any class or classes of public companies. Explanation.—For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off as one.
Read more