One Person Company (OPC) is a unique form of business entity in India that allows a single entrepreneur to operate and manage a company with limited liability protection. It combines the benefits of a sole proprietorship and a corporate structure, offering the owner full control over the business while safeguarding personal assets. Gupta Pawan and Co. provides expert guidance and support to entrepreneurs looking to establish and manage their OPC efficiently, ensuring compliance with regulatory requirements and facilitating sustainable growth.
What is one person company ?
A One Person Company (OPC) is a type of business entity in which there is only one promoter or shareholder who has full control over the company and its operations. It is a form of private company where the individual enjoys limited liability protection, meaning their personal assets are separate from the company’s liabilities.
One Person Company Benefits
One Person Companies (OPCs) offer several benefits to entrepreneurs and business owners:
Limited Liability: The primary advantage of OPCs is that the liability of the owner is limited to the extent of unpaid subscription money in their shares. Personal assets are generally protected from business liabilities.
Single Ownership: OPCs allow for complete ownership and control by a single individual, making decision-making faster and more efficient.
Separate Legal Entity: Like other forms of companies, OPCs are considered separate legal entities distinct from their owners. This enhances credibility and trustworthiness in business transactions.
Less Compliance: OPCs have fewer compliance requirements compared to other types of companies, reducing administrative burden and costs. This makes them easier to manage, especially for small businesses and startups.
Continued Existence: OPCs enjoy perpetual succession, meaning the company continues to exist even if the owner dies or becomes incapacitated, ensuring continuity of business operations.
Greater Access to Credit and Funding: As a registered corporate entity, OPCs may find it easier to access bank loans, credit facilities, and investment capital compared to unregistered businesses or sole proprietorships.
Tax Benefits: OPCs are eligible for various tax benefits available to companies, such as corporate tax rates and deductions, which can lead to lower tax liabilities and enhanced profitability.
Enhanced Business Opportunities: Being recognized as a company can open up more business opportunities, contracts, and partnerships that may not be available to sole proprietorships or unregistered entities.
Brand Building: Operating as an OPC can enhance the brand image and reputation of the business, attracting more clients, customers, and business associates.
Conversion and Expansion: OPCs have the flexibility to convert into other types of companies, such as private limited companies, as they grow and expand their operations, thereby accommodating future business needs.
Overall, OPCs provide a balanced structure that combines the benefits of limited liability with the flexibility and operational ease suitable for small businesses and solo entrepreneurs.
How to register One Person Company ?
Registering a One Person Company (OPC) in India involves several steps and compliance with the Companies Act, 2013. Here’s a general overview of the registration process:
Obtain Digital Signature Certificate (DSC):
- The first step is to obtain a Digital Signature Certificate (DSC) for the proposed director of the OPC. This is necessary for filing the registration documents electronically.
Obtain Director Identification Number (DIN):
- The next step is to obtain a Director Identification Number (DIN) for the proposed director(s) of the OPC. DIN can be obtained by filing Form DIR-3 with the Ministry of Corporate Affairs (MCA).
Name Reservation:
- Once you have the DSC and DIN, you need to apply for name reservation for your OPC. You can file Form SPICe+ (INC-32) along with Form SPICe+ (INC-33) for name reservation and company incorporation. The proposed name should be unique and adhere to the naming guidelines prescribed by the MCA.
Drafting Memorandum and Articles of Association:
- Draft the Memorandum of Association (MoA) and Articles of Association (AoA) of the OPC. These documents define the scope of activities and rules for the company.
Filing for Incorporation:
- Once the name is approved, you can proceed with filing the incorporation documents. File Form SPICe+ (INC-32) along with Form SPICe+ (INC-33), which includes MoA, AoA, and other required documents like identity proof, address proof, etc.
Payment of Fees:
- Pay the prescribed registration fees based on the authorized capital of the company.
Certificate of Incorporation:
- After verification of documents and approval by the Registrar of Companies (RoC), the RoC will issue a Certificate of Incorporation (COI). This document signifies that your OPC is now legally incorporated.
PAN and TAN Application:
- Once you receive the COI, apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for your OPC.
Post-Incorporation Compliance:
- After incorporation, ensure compliance with statutory requirements such as appointment of a nominee director, maintaining statutory registers, filing annual returns, conducting board meetings, etc.
Bank Account and GST Registration:
- Open a bank account in the name of your OPC and apply for GST registration if applicable.
It is advisable to seek assistance from a professional such as a company secretary or a chartered accountant to ensure compliance with all legal requirements and smooth registration of your One Person Company.
One Person Company Fees
The fees for registering a One Person Company (OPC) in India depend on several factors, including the authorized capital of the company and the professional fees charged by service providers. Here’s a breakdown of the typical fees involved:
Government Fees:
- Digital Signature Certificate (DSC): Approximately ₹500 to ₹2,000, depending on the certifying authority and validity period.
- Director Identification Number (DIN): ₹500 to ₹1,000 per director.
- Name Reservation: ₹1,000 to ₹2,000.
- Incorporation Fees: The government fees for incorporation depend on the authorized capital of the company:
- Up to ₹1 lakh: ₹4,000
- ₹1 lakh to ₹5 lakh: ₹8,000
- Above ₹5 lakh: Incremental fees based on the authorized capital.
- These fees are payable to the Ministry of Corporate Affairs (MCA) at the time of filing the incorporation documents.
Professional Fees:
- Fees charged by professionals such as company secretaries, chartered accountants, or incorporation service providers for assisting with drafting documents, filing applications, and ensuring compliance. These fees can vary widely based on the complexity of the work and the service provider’s rates.
Additional Costs:
- Costs associated with obtaining PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) after incorporation.
- Costs for stamp duty (if applicable) on the MoA and AoA, which vary by state.
Annual Compliance Costs:
- After incorporation, there are annual compliance requirements such as filing annual returns, maintaining statutory registers, conducting board meetings (if applicable), etc. These may involve additional costs depending on whether you handle them internally or engage professionals for assistance.
It’s important to budget for these fees and costs when planning to register a One Person Company. Prices can vary based on the service provider and the specific requirements of your business. Seeking guidance from a professional can help ensure that all steps are followed correctly and that you understand the total financial implications of setting up your OPC.