VS
Sole Prop is fastest and cheapest but exposes personal assets. OPC gives limited liability for ₹3,500 more annually.
Pick Sole Proprietorship when
Annual income below ₹15 lakh
Low liability exposure (consulting, design)
You want lowest cost + simplest structure
You're testing a new business idea
Pick OPC when
Annual income above ₹15-20 lakh
You handle customer deposits / advances
Liability exposure is high (medical, manufacturing)
You want a registered company name
Feature
Sole Proprietorship
OPC
Setup cost
₹1,999
₹5,499
Setup time
3-5 days
7-10 days
Limited liability
No (personal assets exposed)
Yes
Separate legal entity
No
Yes
Tax
Slab (5-30%) on personal ITR
22% corporate
Annual compliance cost
₹0-2,000
₹4,999-7,999
Bank credit / loans
Personal credit basis
Company credit profile
Customer credibility
Lower for B2B
Higher for B2B
Conversion possible
Convert to OPC any time
Convert to Pvt Ltd at thresholds
If your business is genuinely tiny — annual income ≤ ₹10 lakh, all-cash, no employees, no inventory — sole proprietorship is fine. The ₹3,500/year OPC compliance saves you nothing.
Anytime you sign customer contracts, handle deposits, employ people, or operate in liability-heavy sectors (medical, food, manufacturing). One bad lawsuit can wipe out personal assets.
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