Starting a company and often finding the niche for their business is a big decision for entrepreneurs. When looking at forming a one-person company, it can better suit their needs as they have the freedom to work on their schedule, have significant power in decision-making and have stable revenue.
Term Documents and Taxes
There are many reasons why a one-person company is better for entrepreneurs in India. One of the biggest reasons is that it is much easier to manage term documents and taxes when you are the only company owner. You will not have to worry about sharing profits with other shareholders or partners, and you can easily keep track of all the money coming in and going out of the business. This can save you a lot of headaches down the road and help you keep your business organised and running smoothly.
Difference Between a One Person Company and a Partnership or Proprietorship
There are many benefits of incorporating a One Person Company (OPC) in India for entrepreneurs. OPCs have several advantages over other business structures, such as partnerships and proprietorships.
Some of the key benefits of an OPC include the following:
- Sole Proprietorship: An OPC is a sole proprietorship, which means that the business is owned and operated by one individual. This gives the owner complete control over the business and its operations
- Limited Liability: One of the biggest advantages of an OPC is that it offers limited liability protection to its owners. This means that the owner is not personally liable for the debts and liabilities of the business
- Separate Legal Entity: An OPC is a separate legal entity from its owner. This means that the business can enter into contracts, own property, and sue or be sued in its own name
- Simplified Compliance: An OPC is subject to simplified compliance requirements as compared to other business structures. For example, an OPC is not required to hold annual general meetings or prepare audited financial statements.
Benefits of Starting a One-Person Company
There are several reasons why an entrepreneur might choose to start a one-person company in India. One of the main advantages is that it can be easier to get started and get registered than other types of businesses. Additionally, a one-person company can offer some tax benefits and may be simpler to run than a more complex business structure.
Another advantage of a one-person company is that it can be easier to get funding from banks or other lenders. This is because the business owner will have full control over the company and its finances. Additionally, a one-person company can be less risky for investors, as there is only one owner who is responsible for the business.
Finally, a one-person company can offer flexibility and independence to the entrepreneur. The business owner will have complete control over all aspects of the business, from operations to marketing to financial management. This can be a great option for entrepreneurs who want to control their businesses completely.
Tax Benefits of a One-Person Company vs Partnership
As an entrepreneur, you always look for ways to save on taxes. After all, every penny you can save on taxes is one more penny you can reinvest into your business. So, when choosing the legal structure for your business, you may wonder if a one-person company is the better option for you in India.
The answer is yes! Here’s why:
1. You will get a lower tax rate:
As a one-person company, you will be taxed at a lower rate than a partnership. This is because partnerships are considered ‘pass through’ entities, meaning the taxes are passed to the partners. On the other hand, a one-person company is a separate legal entity and therefore taxed at the corporate tax rate, which is lower than the personal tax rate.
2. You can avail of certain tax benefits:
Certain tax benefits are available only to one-person companies in India. This can help reduce your overall tax liability. Additionally, you can carry forward losses incurred in any year and set them off against profits in future years.
Statistics for One Person Company in India
There are many advantages to starting a one-person company in India. For starters, it is easier to get started, and you don’t need to have a minimum amount of capital required as compared to starting a private limited company. Additionally, you have complete control over the company and don’t need to deal with partners or shareholders. This structure is also less bureaucratic, and you can make faster decisions. Additionally, it is easier to wind up a one-person company than a larger one.
Now let’s look at some statistics. As of 31 March 2016, there were 3,161 one-person companies registered in India. This is a significant increase from the 2,386 registered in the previous year. Additionally, the number of one-person companies has been increasing by around 20% since 2014.
The Indian government has supported this business structure and provided various incentives for entrepreneurs to set up one-person companies. The rise of digital media and online businesses has made it easier for individuals to start and run their businesses without needing much capital or infrastructure.