The One Person Corporation (OPC) and Sole Proprietorship may sound similar but they have unique provisions, exceptions, and structure that only applies to each one.
Below you’ll find a table of the major differences between the two business types:
| Sole Proprietorship | One Person Corporation | |
| Name | It can be a trade name or the name of the individual since it isn’t a separate entity. | The company name will have the suffix “OPC” at the end. |
| Legal status | A proprietorship is not considered as a separate legal entity. | OPC is a separate legal entity. |
| Requirements | Department of Trade and Industry (DTI) Bureau of Internal Revenue LGU where your business located: -Barangay -Mayor’s Office If you have employees, you need to register the ff: -SSS -PHIC -HDMF There is no need for SEC registration. | Requires registration with the Securities and Exchange Commission (SEC) with the ff. requirements: Cover Sheet Articles of Incorporation Written consent from the nominee and alternate nominee. Bureau of Internal Revenue LGU where your business located: -Barangay -Mayor’s Office If you have employees, you need to register the ff: -SSS -HDMF -PHIC |
| Requirements Registration cost | The government fee is cheaper than the OPC. Registration in DTI is cheaper compared to SEC. | The government fee is more costly than sole proprietorship. SEC Filing Fees for registration: Articles of Incorporation Name Reservation FIA Application Fee Legal Research Fee (LRF) Documentary Stamp |
| Tax | The owner’s whole income is taxed, including his/her salary if he/she is also an employee. The final amount depends on a graduated rate. In addition, if revenue is below P3 million, the owner is eligible to a final tax of 8% (versus the corporations’ 30%* income tax). | An OPC has a flat 30%* income tax rate. |
| OSD | A proprietorship can avail the 40% Optional Standard Deduction on its net revenue. No deduction of other expenses is allowed. | An OPC can also take advantage of the 40% Optional Standard Deduction on its net revenue. Meaning, it can deduct direct costs first, then the optional 40% deduction from its gross income. |
Both Sole Proprietorship and OPC are forms of One-Man Organizations. It is, however, evident from the above distinction that incorporating an OPC offers several advantages over a traditional proprietorship firm. Nevertheless, each type of business has its own set of advantages and disadvantages, to which establishing a business will depend on the entrepreneur’s intentions, such as his goals, the nature, and size of the company. In short, these are custom-made judgments that differ from person to person and business to business.
For other queries, our team is more than willing to help you understand and decide which entity is more appropriate to your business model.
