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One Person Company Registration: Your Gateway to Entrepreneurship!
One Person Company (OPC) registration is a highly sought-after choice for individual business people seeking to establish a business entity with limited responsibility. This formal framework enables an individual to operate a company, combining the benefits of a private limited company with the simplicity of having just one member. There are approximately 34,446 OPC companies registered in India. OPC allows entrepreneurs to enjoy the benefit of limited liability that separates their personal assets from the liability of the company. The incorporation of OPC in India includes minimal requirements and only one person works in the capacity of both chairman and shareholder. Incorporation of the OPC is regulated by the Companies Act of 2013 in India. The statutes entail all the liabilities and requirements of OPC.
For small entrepreneurs who are looking to kickstart their business journey, OPC works as a best suitable option that gives them the benefit of the traditional company and sole proprietorship without the complexities of relying on other partners.
Benefits of OPC Registration in India
Incorporation of OPC in India comes with several benefits that include the following:
- Sole Ownership:
OPC is owned by a single individual only. The one person holds all the shares of the company. The sole ownership gives them a liberty to finance the business completely. The individual is the one who has the pocket to earn the profit as well as bear the expenses. Thus, the sense of independency streamlines the decision-making process and allows the business to run efficiently and smoothly.
- Limited Liability:
The owner of the OPC allows the benefit of Limited Liability Protection i.e., unlike sole proprietorship, the liability of the owners is not unlimited, the liability of its shareholders is restricted to the unpaid amount on their shares. Personal assets of the owner and shareholder remains unbothered with the loss/debt or liability of the company.
- Separate Legal Entity:
OPC enjoys the benefit of a separate legal entity just like Private Limited Company. The legal entity of the company is separated from its owner. The company can enter into the contracts in its own name and business of the company is distinguished from the individual. So, even if there is some obligation on the company, the owner and shareholder is protected.
- Perpetual Succession:
The existence of the company is independent of existence of its shareholder and or owner. After incorporating the OPC, a nominee has to be appointed by owner who would succeed the company as the new owner in case of the death or permanent departure of the founding owner. This perpetual succession guarantees the continuity of the business.
- Easy Transferability of Shares:
Registering a company in India offers easy transferability of shares means that shares of the company can be transferred from one shareholder to another. The leverage smoothens out the transaction in management of the company and later enhances the flexibility in business operations of the company.
- Access to Investments and Funding:
Capital can be easily raised in a OPC as it offers as Equity shares can be easily issued by company to raise fund. Issuing equity shares attracts potential investors and venture capitals to invest in the company.
- Increased Trustworthiness:
Registering an OPC enjoys greater market credibility as compared to other business structures. The greater credibility leads to increased trustworthiness among investors. The advantage is gain by the company due to its registration. Registering a company makes the company legally recognizable and shows that it meets with the regulatory standards.
- Benefits of MSME:
OPC can easily avail the benefit of OPC after the registration of MSME under Udyam Registration. Registration as MSME allows the company to explore more business opportunities by providing them the benefit of interest rates, collateral free loans, and many credit facilities.
Tax Benefits for OPC Registration in India
|
Tax Benefits |
One Person Company (OPC) |
Sole Proprietorship |
Partnership |
|
Tax Rate on Profits |
It is 30% for OPCs with a turnover of less than ₹400 crores. |
Taxed at individual income tax rates (up to 30%) |
Taxed at individual income tax rates (up to 30%)
|
|
Dividend Distribution Tax (DDT) |
No DDT. Tax paid by the shareholder on the dividend received |
No DDT. Tax paid by the owner on the income derived |
No DDT. Tax paid by partners on their share of income |
|
Tax Incentives for Startups |
Eligible for a 3-year tax holiday under the Startup India scheme (if eligible) |
Not available |
Not available |
|
Carry Forward of Losses |
Losses can be carried forward for 8 years and set off against future profits. |
Losses can be carried forward and set off against future profits (same as a personal tax return) |
Losses can be carried forward and set off against future profits |
|
Presumptive Taxation Scheme (Section 44ADA) |
Available (50% of gross receipts deemed as income for small businesses with gross receipts up to ₹50 lakh) |
Available (50% of gross receipts deemed as income for small businesses with gross receipts up to ₹50 lakh) |
Available (50% of gross receipts deemed as income for small businesses with gross receipts up to ₹50 lakh) |
|
GST Registration Requirement |
Mandatory if turnover exceeds ₹40 lakhs (₹20 lakhs for special category states) |
Mandatory if turnover exceeds ₹40 lakhs (₹20 lakhs for special category states) |
Mandatory if turnover exceeds ₹40 lakhs (₹20 lakhs for special category states) |
|
Capital Gains Tax |
Capital gains taxed at individual rates (LTCG on listed shares exempt up to ₹1 lakh per annum) |
Taxed at individual rates (LTCG on listed shares exempt up to ₹1 lakh per annum) |
Taxed at individual rates (LTCG on listed shares exempt up to ₹1 lakh per annum) |
These benefits collectively make OPC registration online a desirable choice for businesses who wish to start their company with a strong legal basis and minimum administrative load. It's a route to combine the freedom of a sole proprietorship with the benefits.
Requirements for OPC Registration in India
To incorporate a One Person Company, the following requirements have to be met:
- Sole Director and Shareholder: One of the most important requirements of the OPC is that only one director and shareholder is sufficient to incorporate a company.
- Minimum Capital Requirement: To incorporate OPC, you don’t need a hefty capital, only investment of 1 lakh is enough to incorporate an OPC in India.
- Registered Office Address: Another important requirement for OPC registration is the giving of a registered office address. This address serves as the official location for contact, legal letters, and regulatory compliance, stressing the need for a real presence to perform business activities successfully and stick to statutory duties.
Eligibility Criteria for OPC Registration in India
Incorporation of a One Person Company (OPC) must meet the following criteria:
- Natural Person: A natural person is an individual human being. Only a natural person who is a resident of India can incorporate OPC in India.
- Indian Resident: To incorporate an OPC, the natural person must have resided in India for a minimum of 182 days in the preceding fiscal year.
- Major Person: A person who is 18 years or older is eligible to incorporate OPC in India. Minor i.e., the person below the age of 18 years old is a ‘minor’ and is incompetent to entered into contract thus ineligible to form an OPC in India.
- No Other OPC Registration: A person cannot establish more than one OPC or become a director in more than one such company. This limit is in place to prevent a single person from forming multiple organisations and misusing the benefits given to OPCs.
These criteria are meant to keep the purity of the OPC structure and ensure that it remains a realistic choice for genuine entrepreneurs looking to run a business with a simpler company structure. Compliance with these qualifying standards is important for the successful creation and running of an OPC in India.
Who is Ineligible to Form an OPC in India?
- Individuals below the age of 18 years.
- An individual who is already a shareholder or partner in an existing OPC.
- A Non-Resident Indian (NRI) or a foreign citizen is a person who has not stayed in India for at least 182 days in India the previous calendar year.
- Individuals disqualified under the Companies Act, 2013.
Documents Required for OPC Company Registration
The following are the essential documents required for the establishment of an OPC in India:
- PAN Card: The Permanent Account Number card of the director is an important identity proof needed by the MCA to incorporate any company in India.
- Aadhar Card: The Aadhar card is another important record that required by MCA that proves the name and location of the director. It is used to prove the Indian residency status of the director.
- Address Proof: Proof of the listed office address is needed to confirm the site of the OPC. This can be a recent energy bill, lease or rent agreement, or any other government-issued document that clearly says the address and the name of the owner or the company.
- Passport-size Photographs: Recent passport-sized pictures of the head are needed to finish the steps of the OPC application. These pictures are usually attached to different forms and applications filed to the MCA.
Checklist for OPC Company Registration
To successfully create an OPC (One Person Company), a thorough summary of necessary steps and papers is important to ensure compliance with legal requirements and business readiness:
1. Choose a Unique Name: Selecting a unique name for the OPC is the initial step in the creation process. The chosen name should be unique, not matching any current company, and must meet with the naming rules set by the regulatory authorities.
2. Get a Digital Signature Certificate: Getting a Digital Signature Certificate is vital for online document signing and verification during the registration process. The DSC ensures the validity and security of electronic papers presented for OPC formation.
3. Apply for Director Identification Number (DIN): Directors of the OPC must receive a unique Director Identification Number (DIN) given by the Central Government. The DIN serves as a unique name for directors and is necessary for all people wanting to hold directing roles in companies.
4. Draft of MoA and AoA: The Memorandum of Association (MOA) and Articles of Association (AOA) describe the company's goals, rules, and laws governing its activities. These papers describe the company's organisation, powers, and internal control system, giving a formal basis for the OPC's actions.
By carefully following this plan, businesspeople can handle the OPC registration process quickly, ensuring compliance with legal requirements and setting a strong basis for their business efforts.
Process of One Person Company Registration in India
The process of registering the OPC in India is straightforward but needs to strictly comply with procedural requirements as laid down under the Companies Act, 2013:
Step 1: Obtain a Digital Signature Certificate (DSC)
The certificate is used to sign the documents early for the documents that have to be submitted online. It is obtained from the government recognized certifying authorities.
Step 2: Obtain a Director Identification Number (DIN)
It is a unique identification number issued by the Ministry of Corporate Affairs (MCA). Mandated under the Companies Cat, 2013, it is an essential number that legally recognizes the director in a company. The number is new and unique for every director. The application for DIN is filed on the MCA portal using SPICe+ Form known as (Simplified Proforma for Incorporating Company Electronically Plus on the MCA portal.
Step 3: Reserve a Company Name
After obtaining DSC and DIN, the next step is to choose the name for the company. The name has to be new, unique, not similar to any existing company. You also need to keep an eye that it does not infringe on any registered trademarks. The proposed name of the company has to be checked for availability on the MCA portal.
Step 4: Draft the Memorandum of Association (MoA)
After choosing the name, the next step is to draft the MoA. MoA is the document that outlines the main objectives, purpose, activities, and scope of the company. It is pertinent to note that the MoA of the company cannot be amended after the incorporation of the company.
Step 5: Draft the Article of Association (AoA)
It is the document that lays out the rules and regulations for the internal management of the company. The AoA contains the purpose/objective, capital structure, corporate governance, and internal administration of the company. The AoA of the company can be amended post incorporation of the company with the prior approval of the directors.
It is pertinent to note that the directors and shareholders are mandated by law to sign the MOA.
Step 6: File Incorporation Documents with the Registrar of Companies (ROC)
Once the MOA and AOA of the company are drafted and are ready to be filed, the next step is to file them online through the MCA portal with the appropriate fee with the following necessary documents with the Registrar of Companies (ROC):
- Identity and Address Proof of Directors and Shareholders: It includes PAN card, passport, or voter ID, aadhar card, bank statements, or utility bills (not more than 2 months).
- Proof of Registered Office Address: It includes documents of the registered office of the company like lease agreement and rent agreement or sometimes electricity bill of the company.
- Consent from Director(s): The director of the company is mandated to consent to their appointment and sign that consent form.
Step 7: Obtain a Certificate of Incorporation
When the RoC verifies all the company's compliance requirements and all the documents, a Certificate of Incorporation will be issued by the ROC. The certificate officially states that the OPC is incorporated and officially marks the formation of your OPC. The certificate includes the Corporate Identification Number (CIN), which is the unique Identification number for each company. It is pertinent to note that post Certificate of Incorporation, PAN Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are automatically generated.
Step 8: Open a Bank Account
After applying for PAN and TAN number, a new bank account in the name of company has to be opened to enable the company for monetary transaction.
Annual Compliance for OPC Post Incorporation
Compliance for an OPC incorporation includes several crucial aspects to ensure legal obedience and operating openness.
- Filing Financial Statements: Balance sheets, profit and loss, and cash flow statements of the company have to filed to the RoC within 30 days of the Annual General Meeting.
- Statutory Audit: It is mandatory for the OPC to conduct a mandatory audit. The statutory audit makes sure that the monetary statics of the company are correct, dependable, and meet accounting standards.
- File Annual Return: The Annual Return of the Company has to be filed within the 60 days of the Annual General Meeting to the MCA.
- Tax Filings: For any incorporation in India, tax compliance is the most crucial compliance. It includes timely filing of income tax returns, GST reports, and other tax-related papers as per the relevant laws.
Things to Keep in Mind While Incorporating an OPC
- The OPC cannot be incorporated to carry out non-profit business activities.
- The ruled to hold AGM is different for OPC. OPC is not mandated by Law to hold AGM within 6 months from the end of financial year.
- If the paid-up share capital and annual turnover of an OPC exceeds Rs. 50 lakhs and Rs. 2 crores respectively, then it has to be converted into Private Limited Company.
Why Choose Kanakkupillai for OPC Incorporation?
When it comes to incorporating a One Person Company (OPC), Kanakkupillai stands out as a symbol of excellence, providing businesses with a unique mix of knowledge and simple services. Our pro experts are not just professionals at coping with the problems of the registering method; they're devoted to demystifying it for you. With Kanakkupillai, you are no longer just hiring a service provider—you are operating with a team that is really concerned with your fulfilment. We make sure that every step, from name reservation to getting the Certificate of Incorporation, is treated with precision and care, leaving you conscious of the bigger image—your commercial enterprise aim.
Moreover, Kanakkupillai's method of OPC registration is intended with the entrepreneur's ease in mind. We apprehend that within the rapid-paced world of commercial enterprise, time is a valuable device. That's why our procedures are designed to save time and effort, considering a hassle-free experience that respects your timetable. Our considerable prices and committed customer support are here to ensure to support you at every step.
By choosing Kanakkupillai, you can pave the way to success!
Frequently Asked Questions
What is the minimum cash needed for OPC registration?
There is no minimum cash needed for OPC registration.Can a foreign person create an OPC in India?
Yes, a foreign person can create an OPC in India.How long does it take to finish OPC registration?
It takes about 7–15 days to finish OPC registration.Is it required to have a real office for OPC registration?
Not necessary; a virtual office address suffices.What are the legal standards for OPCs?
OPCs must make yearly reports and financial records, excluding cash flow statements.Can an OPC be changed into a private limited company?
Yes, an OPC can be changed into a private limited business.What are the benefits of changing a sole proprietorship into an OPC?
Limited responsibility, different legal body, eternal life, and ease of control transfer are some benefits.Are there any limits on the business actions of an OPC?
OPCs cannot engage in Non-Banking Financial Investment activities or invest in shares of other companies.How often does an OPC need to make yearly returns?
OPCs must make yearly records within 60 days of the end of the financial year.What are the tax effects for OPCs?
OPCs must pay income tax on gains, meet with GST if applicable, and fulfil other tax-related responsibilities.We Provide Best Quality
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