If you’re a strong believer in the notion that ‘too many cooks can spoil the broth’ and wish to operate your business independently, this article is for you.
Opting for a Person Company (OPC) can be one of the smartest ways of starting a business. Unlike a sole proprietorship, in an OPC the owner does not have to personally bear the brunt of all the liabilities of the business. Read here to get the features of One Person Company type of company registrations.
The One Person Company concept was introduced to be a stronger and more viable business model over the sole proprietorship structure. It gives a single promoter full control over the company while limiting their liability to contributions to the business. This owner is the only shareholder and may also be the only director of the OPC (also a nominee director is elected but they have no real power until the original director is no more or incapable of entering into a contract). Hence in an One Person Company, there is no chance of raising equity funding or offering employee stock options.
Features of One-Person Company
In this section, we will explore some of the main features of One Person Company registrations:
For Solo Entrepreneurs
A big improvement over the sole proprietorship model is that the One Person Company model is meant for solo entrepreneurs, who wish for their liability in business dealings to be limited.
Furthermore, given that there must be a nominee director (to enable the perpetual existence of the OPC), it is similar to a private limited company and hence will also have the flexibility of raising additional funding.
| To allow such OPC’s to grow, Finance Minister Nirmala Sitharaman while delivering the Union Budget 2021-22 announced that there will be no restrictions on the paid-up capital and the average annual turnover of OPCs. |
This is one of the crucial features of One Person Company type of company registrations.
High Compliance Requirements
In terms of high compliance requirements, OPCs rank second next to private limited companies. While there is no requirement for mandatory board meetings, OPCs must conduct a statutory audit, submit annual reports, and IT returns, and comply with the other requirements of the MCA.
Minimal Tax Advantages
A One Person Company, like a private limited company, has some industry-specific advantages. Taxes are to be paid at a flat rate of 30% on profits, on which DDT applies as does MAT. If you’re looking for a structure with the lowest tax burden, the LLP model does offer some better benefits for some business categories. Get in touch with our experts to determine which structure offers the best tax benefits for your business niche.
Startup Costs
The cost of OPC company formation is nearly the same as a private limited company, with total costs a little less than ₹7,000. However, the cost structure changes in different states such as Kerala, Punjab, and Madhya Pradesh, where the fees are on the higher end.
Get in touch with Vakilsearch to get an accurate quote on the costs involved in incorporating an OPC in your state.
Exclusive Membership
The director of an OPC is forbidden from starting another OPC. While they may hold directorship in a private or public limited company, they may not open another OPC.
You must also not forget that starting an OPC requires a substantial degree of commitment to your cause. You can’t start two businesses in the OPC format at any point in time. However, you can be a director in any other standard company without creating any legal troubles for yourself.
Talk to Our Experts
Thus, you might have got to know about the features of One Person Company type of company registrations.
Vakilsearch can help you register your OPC in 3 simple steps:
- Right Registration Selection – Our experts will guide you on the different ancillary registrations that are best for you, based on your activity.
- Online Paperwork – All documents are prepared online, in a simple, and hassle-free manner.
- Registration – We will then register the OPC and handle all other formalities on your behalf.
Get in touch with our team right away for a hassle-free incorporation experience!
