one person company vs sole proprietorship
"A one-person company is a type of sole proprietorship or entity. The name comes from the fact that it is headed and managed by one person whereas a sole proprietorship can also be managed by more than one person."
The SCARS (Sole Proprietors And Retirement Savings) Act was introduced in 2004. It was designed to provide protections for alternate retirement savings vehicles such as SIMPLE IRAs, Simple Plans, SEP IRAs, and Keogh for small businesses.
Sole proprietorships can opt for this retirement plan instead of individual 401k plans for their employees or they can offer an IRA to any non-owner employees. Furthermore, sole proprietorships may offer employees the option to do self-directed investing through their business retirement account, which might not be an option with a solo 401k plan.
A sole proprietorship may choose to offer all its employees a SIMPLE IRA or SEP-IRA instead of a 401k.
The Solo 401k Plan vs Traditional 401k Plan
"A solo 401k plan is a plan that allows one person to be the only participant. The plan allows the employee to manage the money and decide where to invest the funds. Unlike a traditional 401k plan, the solo 401k plan is not regulated by the government. A traditional 401k plan allows multiple participants to manage the funds."
A traditional 401k plan allows the employees to contribute up to $17,500 in 2019. A solo 401k plan may allow an employee to contribute up to $50,000 or $100,000 per
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Conversion: A One Person Company must convert itself into a private or public limited company the moment it has an average turnover of over Rs. 2 crores for three years or a paid-up share capital of over Rs. 50 lakh. A sole proprietorship, on the other hand, may remain one no matter what its revenues are.
Compliance: A One Person Company has to file Annual Returns and meet other compliances of a Private Limited Company and would also have to get its accounts audited in the same manner. On the other hand, a sole proprietorship will only need to get its accounts audited under the provisions of Section 44 AB of the Income Tax Act, i.e., in the event that its turnover crosses the specified threshold.
Succession: For the purposes of succession, an OPC needs to have a nominee designated by its member. The nominee should also be a natural-born citizen and resident of India. The nominee shall, in the event of the death of the member, become a member of the company and shall be responsible for the running of the company. In the case of a sole proprietorship, however, succession can only take place through execution of the Last Testament and Will, which may or may not be challenged in a court of Law.
