OPC registration has become the go-to business structure in India due to its minimal compliance requirements and the many advantages it can bring entrepreneurs.
A registered OPC can access loans from banks and financial institutions. Furthermore, its books must be audited annually, which enhances credibility with vendors and consumers.
Reason for OPC Registration in India
1. Limited Liability
One-person companies provide individuals with limited liability protection. This enables them to assume all business risks themselves without sharing with anyone else, meaning if a business fails, personal assets won’t be threatened by creditors if it goes under. It is an ideal way to shield against financial losses when starting small companies.
As one-person companies are legal entities, the sale is straightforward if ever necessary. Transferring ownership can also make getting financing from banks or investors much simpler since they know it is legitimate and registered with them.
An OPC requires several essential documents to get up and running, such as its Director Identification Number (DIN) and bank statements. Bank statements serve as evidence that its owner can manage its finances successfully. Furthermore, providing copies of sale deeds of properties that the OPC will utilize is also mandatory.
As an additional perk of OPC ownership, owners can benefit from opening a zero-balance current account that will save them money on recurring fees. Furthermore, its low compliance requirements mean you’ll spend less time and money managing them than larger companies.
Considering starting a business in India? An OPC could be the ideal way to do it! It can save you time and hassle from registering a big corporation and give your enterprise more credibility while giving you access to the tax advantages of being a registered entity.
OPCs must meet a threshold limit of Rs 50 lakh in paid-up capital and an average annual turnover of Rs 2 crore over three immediately preceding financial years. Still, if more funds are required, you can convert your OPC into either a private limited or public limited company.
2. Perpetual Succession
An OPC is a legal entity that provides limited liability protection to its owner. This means that their assets remain separate from those belonging to the company, providing added peace of mind should financial issues or legal disputes arise and making funding and loan applications simpler – especially helpful for small business owners and startups.
OPCs qualify for many of the same advantages private companies enjoy, such as tax exemptions and greater access to funding. This allows OPCs to grow quickly and become more profitable – an attractive proposition for entrepreneurs. There are, however, certain restrictions on the capital that an OPC can raise; its total share value cannot exceed Rs 2 crores, and at least one other person must serve as a director to prevent it from surpassing this limit.
OPC registration offers numerous advantages to your business, including increasing consumer and vendor satisfaction and attracting investors. Furthermore, OPCs typically have lower compliance requirements than other forms of businesses, making registration and management simple.
OPCs also boast perpetual succession, meaning that their business will not cease operating even after an owner dies or becomes incapacitated. To accomplish this, shareholders must name a nominee in their memorandum of association.
The nominee must be an Indian national or resident and cannot hold ownership in another OPC. Furthermore, applicants must submit proof of address and identity documents and obtain a Digital Signature Certificate and Director Identification Number (DIN).
Once submitted, an expert will review your submissions before completing and filing with the ROC the SPICe form, AOA and MOA forms as applicable. When all of these have been filed successfully, they will issue a certificate of incorporation.
3. Transparency
One of the main draws to OPCs as a form of business in India is their transparency. As legal entities, OPCs enjoy greater credibility among vendors and lenders, allowing easier acquisition of credit facilities. Furthermore, this limited liability protection can protect directors’ personal assets from becoming part of any debt due to the company. Plus, tax savings opportunities and reduced compliance requirements!
OPCs offer many advantages over sole proprietorships regarding capital requirements and funding options, including venture capitalists. Furthermore, OPCs can claim deductions for expenses incurred while operating the business and pay tax at a lower rate than individuals; this makes OPCs an appealing choice for small business owners and startups.
Registering an OPC requires providing several documents, including identification and address proofs, the MOA/AOA for your company, and permission from property owners where you intend to conduct your business. In addition, obtaining a Digital Signature Certificate (DSC), which will serve to authenticate all forms and documents submitted via the MCA portal, is compulsory during registration.
Once you have prepared all required documents and drafts, you can file your SPICe+ application with MCA on their portal. Your SPICe+ application must include all forms and attachments necessary, along with DSC verification from an expert that all compliances have been fulfilled.
Once registered, OPCs can begin engaging in business activities and collecting income. You should keep tabs on expenses and income and be mindful of which taxes must be paid. Furthermore, an annual return – an account detailing all transactions completed over 12 months with earnings to report – must be filed with the Registrar of Companies within three months after your financial year ends.
4. Ease of Incorporation
One Person Company (OPC) is a new and forward-thinking concept that enables individuals to establish their own businesses. It allows aspiring entrepreneurs and young people with entrepreneurial dreams to give form to their ideas faster while contributing to economic development at an increased pace. Before 2013, sole proprietorship was the only viable way for individuals to start businesses, but with the implementation of the Companies Act 2013, new options are now available for starting new enterprises.
One-person companies typically require less compliance than private or public limited companies, including filing cash flow statements and having a company secretary; additionally, there’s no mandatory auditor rotation required, making them an appealing solution for small businesses looking to expand quickly.
Registering an OPC is relatively straightforward and quick, with only a few forms and documents to complete, plus expert assistance to file all of them efficiently and ensure all compliances are met – such as obtaining DINs and DSCs for directors as well as proof of registered office with No Objection Certificate from owner, filing of SPICe+ Form, MOA Agreements and AOA Agreements, along with tax and PAN documents and an expert’s declaration certifying compliances being met.
Once incorporated, an OPC becomes its own legal entity with limited personal liability attributed to its owner based on his shares. This makes incorporation advantageous for small businesses as creditors can only sue the business rather than its owner directly; additionally, it opens doors for funds from venture capitalists, angel investors and incubators without risking personal assets being at stake and allows an OPC easier access to loans from banks who prefer lending money directly rather than indirectly through sole proprietorships or LLPs.
OPCs also benefit from having perpetual succession, with nominees filling in as members and directors upon the death or incapacity of their owner. It should be noted that an OPC with turnover exceeding Rs 2 crore or paid-up capital exceeding Rs 50 lakh must convert into either a private or public limited company for legal compliance reasons.
One Person Company in Future India
A one person company (OPC) model has been put forth to encourage small traders, entrepreneurs with low risk-taking capacity and artisans. This gives them an ideal way to adopt corporate culture without complex legal compliances burdening them.
Establishing a company with perpetual succession makes obtaining loans much simpler for entrepreneurs.
One Person companies are an easy and cost-effective way to incorporate, as only one shareholder and director are needed to make decisions quickly and efficiently.
Benefits of such an arrangement also include making loan applications simpler, as no owner’s personal assets are at stake if their business goes bankrupt.
OPCs require no minimum capital investment, and waiting two years until reaching paid-up capital of Rs 20,000,000 before becoming private or public companies has also been removed, making this an attractive choice for small entrepreneurs. Furthermore, the Company qualifies for foreign investments, Joint Ventures and Mergers.
1. One Shareholder
OPCs take advantage of being legally distinct entities, protecting their assets from liability. Furthermore, OPCs enjoy lower compliance rates and tax advantages.
However, if an OPC’s paid-up capital exceeds Rs 50 lakh or its average annual turnover exceeds Rs 2 crores, its status must be converted into that of a private company by filing Form INC-8. This process can be expedited using Form INC-8 as well.
Therefore, this concept provides immense opportunities for traders, artisans and other small-scale businessmen with low risk-taking capacities who could not start their venture due to the requirement of two shareholders for a private limited company. OPC also adds more credibility as it’s registered with the Ministry of Corporate Affairs, further assisting businesses in achieving growth and expansions.
2. One Director
One person may serve as the sole director of an OPC, with certain restrictions that must be observed. Only natural persons who are Indian citizens and resided there for at least 182 days during the preceding calendar year can incorporate such an entity.
OPCs offer legal protection from personal liability and can raise funds from venture capitalists, banks and other financial institutions. Furthermore, OPCs feature succession provisions so the business will continue even after the death or incapacitation of its founder.
OPCs can convert themselves to private or public limited companies after two years have elapsed from their date of incorporation, and their paid-up capital exceeds Rs 50 lakh, or the average annual turnover during three immediately preceding financial years reaches Rs 2 crore. The conversion should occur through passing a special resolution in a general meeting.
3. One Bank Account
For example, TIMEEV FUTURE (OPC) PRIVATE LIMITED was formed as a legal structure with limited partnerships (OPCs), giving its shareholders several advantages that sole proprietorships do not. These include accessing bank loans more easily, enhanced corporate status, and higher creditworthiness. Company formation lends permanence and limits the liability of business owners. While sole proprietorships can be liquidated due to bankruptcy laws, an OPC can continue operating after its founder passes. Sole Proprietor Companies allow heirs to inherit assets and continue the legacy. Furthermore, an OPC can acquire subsidiaries provided it meets minimum paid-up capital and annual turnover requirements, an advantage for businesses with high growth potential.
4. One PAN
One-person companies (OPCs) have enormously positively affected Indian entrepreneurship, drawing in foreign investment, joint ventures and mergers that will benefit India’s economy and society.
OPCs do have certain restrictions and limitations. Chief among them is that the company cannot float shares, provide employee stock ownership plans (ESOPs), act as an NBFC, or engage in banking activities.
OPCs were previously limited in that they could only convert to a private limited or public limited company after two years; however, this rule has since been amended, allowing OPCs to expand without limits on paid-up capital and turnover while simultaneously lowering minimum residency requirements for Indian nationals.
