How to Convert Sole Proprietorship to One Person Company?

Difference between a Sole Proprietorship Firm and One Person Company

In clear words, an OPC is a company and a sole proprietorship is not. A sole proprietorship does not have its legal recognition and can be closed at any moment. Another different is the nominee, which is present in an OPC. In case of the death or incapability of the owner, an OPC goes to the nominee while a sole proprietorship firm closes.

In case of any loss or damage, a sole proprietor has to pay for the loss from his personal wealth. This is not the case with an OPC because the company fund remains to the company and personal fund remains to the person. In other words, an OPC is similar to any private limited company which has all the liabilities and benefits of a company.

Due to these benefits, many people who have a sole proprietorship firm wish to convert it into an OPC. To do this, they have to go through a details procedure as explained below:

Conversion of Sole Proprietorship firm to One Person Company (OPC)

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.

The steps look very simple but you have to take great care to do it. If you are not sure how to convert sole proprietorship firm into One Person Company, better way is hiring a professional who is well-versed with this process. is one such company that has a team of experts who can help you with converting your sole proprietorship firm into One Person Company with utmost care.

Posted by Anita Aswal - 10th June 15

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