What is One Person Company (OPC) Registration?
The One Person Company (OPC) was recently introduced as a strong improvement over the sole proprietorship. It gives a single promoter full control over the company while limiting his/her liability to contributions to the business. This person will be the only director and shareholder (there is a nominee director, but with no power until the original director is incapable of entering into contract).
So there's no chance of raising equity funding or offering employee stock options. Furthermore, if an OPC hits an average three-year turnover of over Rs. 2 crore or has a paid-up capital of over Rs. 50 lakh, it must be turned into a private limited company or public limited company within six months.
The right structure for solo entrepreneurs looking beyond the opportunities a sole proprietorship affords.
An OPC is a good alternative to running a sole proprietorship, largely because it gives limited liability to the business owner. This means that your liability is limited to the amount you’ve invested in the business; business debts cannot be recovered from personal possessions. Also, a sole proprietorship ceases to exist on the death of its promoter. In the case of an OPC, the nominee director takes over and the entity continues to exist. Single entrepreneurs who do not have another partner to start a private limited company may also consider it.
Only Indian residents can register an OPCs, and that too, only one at a time, as per the specifications of the Ministry of Corporate Affairs.
All such businesses must maintain books of accounts, comply with statutory audit requirements and submit income tax returns and annual filings with the RoC.
There is no difference in capital requirement between an OPC and a private limited company. It needs an authorised capital of Rs. 1 lakh to begin with, but none of this actually needs to be paid-up. This means that you don’t really need to invest any money into the business.
No general advantages; though some industry-specific advantages are available. Tax is to be paid at flat rate of 30% on profits, Dividend Distribution Tax applies, as does Minimum Alternate Tax.
No, an individual can form only one OPC at a time. This rule applies to the nominee in an OPC, too.
Need Our Help?
ForosAdo offers a wide range of financial products and services to individuals and business owners. By seeking our sound financial information, we believe you will be better able to identify your goals and make sound decisions, to help you reach these goals.