One Person Company (OPC) is a type of business entity in India that is designed for sole proprietors or individuals who want to start their own business. It is a hybrid between a sole proprietorship and a private limited company, and it combines the flexibility and simplicity of a sole proprietorship with the legal and financial benefits of a private limited company.
One of the key features of an OPC is that it can be incorporated and managed by a single person, who acts as both the director and shareholder of the company. This person is also responsible for making all business decisions and is the sole point of contact for the company. Additionally, OPCs also have to apply for GST registration as they are a separate legal entity.
How to do go about one person company registration?
Obtain a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) for the proposed director of the company: These can be obtained from the Ministry of Corporate Affairs (MCA) website.
Apply for the availability of the proposed name of the company: This can be done by filing a Form INC-1 with the MCA.
File the incorporation documents, including the Memorandum of Association (MOA) and the Articles of Association (AOA) with the MCA : The incorporation documents must be digitally signed by the proposed director.
Obtain the certificate of incorporation from the MCA, which serves as proof that the company has been registered.
Obtain PAN and TAN for the company and register for GST if applicable
Open a bank account in the name of the company
Obtain licenses and permits as required by the laws applicable to the nature of the business
Important pointers/Checklist for OPC Registration:
Minimum and Maximum of one member.
Prior to incorporation, a candidate shall be appointed.
Form INC-3 should be filled out to request the nominee's consent.
The Companies (Incorporation Rules) 2014 is followed when choosing the OPC name.
A Rs. 1 lakh minimum authorized capital.
The proposed director's DSC.
Evidence of the OPC's registered office.
What are some famous One Person Companies in India:
Flipkart : Sachin and Binny Bansal in 2007 as an OPC. Today, it is one of the most valuable internet companies in India.
Ola Cabs: Ola Cabs, one of India's largest ride-hailing companies, was started by Bhavish Aggarwal in 2010 as an OPC. Today, it operates in over 100 cities across India and has a valuation of over $6 billion.
MakeMyTrip: MakeMyTrip, one of India's largest travel companies, was started by Deep Kalra in 2000 as an OPC. Today, it is a publicly traded company and operates in multiple countries.
Paytm: Paytm, one of India's largest digital wallet and e-commerce companies, was started by Vijay Shekhar Sharma in 2010 as an OPC. Today, it has a valuation of over $16 billion.
OYO Rooms: OYO Rooms, one of India's largest hotel booking companies, was started by Ritesh Agarwal in 2013 as an OPC. Today, it operates in over 800 cities in 80 countries and has a valuation of over $10 billion.
What is the difference between One-Person Company and Sole Proprietorship:
The main difference between the two is that an OPC is a separate legal entity, while a sole proprietorship is not.
An OPC is registered with the Registrar of Companies and has its own PAN and TAN number, whereas a sole proprietorship is not registered and operates under the PAN and TAN of the proprietor. Additionally, OPCs also have to apply for GST registration by providing the necessary documents required for GST registration such as PAN, GST registration certificate and other required documents
An OPC is registered with the Registrar of Companies and has its own PAN and TAN number, whereas a sole proprietorship is not registered and operates under the PAN and TAN of the proprietor.
OPC provides limited liability protection to its owner, while a sole proprietorship does not. This means that the personal assets of the owner are not at risk in case the OPC incurs any debts or liabilities. In contrast, the personal assets of a sole proprietor are at risk if the business incurs debts or liabilities. Additionally, OPCs also have to apply for GST registration as they are a separate legal entity
OPCs have fewer compliance requirements compared to other types of business entities. For example, an OPC is not required to hold regular board meetings or hold an annual general meeting. However, an OPC must file annual returns and financial statements with the Registrar of Companies. In contrast, a sole proprietorship does not have any compliance requirements and is easy to start and close.
What are the advantages of One Person Company (OPC) Registration:
Limited Liability Protection: OPCs provide limited liability protection to the owner, meaning that the owner's personal assets are not at risk in case the company incurs any debts or liabilities.
Fewer Compliance Requirements: OPCs have fewer compliance requirements compared to other types of business entities, making it less burdensome for the owner to run and manage the company. However, OPCs still have to comply with GST laws and regulations, which means they have to apply for GST registration by submitting the necessary documents required for GST registration such as PAN, GST registration certificate, and other required documents.
Separate Legal Entity: OPCs are separate legal entities and have their own PAN and TAN number, which can be useful for raising funds and entering into contracts.
Ease of Incorporation: OPCs are relatively easy to incorporate and require minimal documentation, making it a good option for entrepreneurs and small business owners who want to start their own company.
What are the Disadvantages of One Person Company Registration:
Limited to one member: OPCs can have only one member, which means that the owner is responsible for all the decision-making and management of the company.
No public funding: OPCs cannot raise funds from the public, which can limit the growth potential of the company.
No option of conversion: OPCs cannot be converted into any other type of company.
Restrictions in business activities: OPCs have restrictions in terms of the types of business activities they can engage in, which can limit the potential of the company. Additionally, OPCs also have to apply for GST registration as they are a separate legal entity.
Conclusion
In summary, OPC is a good option for an individual who wants to start a business but wants to have the protection of limited liability and the advantages of a private limited company without the added compliance requirements. However, it also has its own set of limitations, so it's important for the individual to carefully consider their business needs before deciding to form an OPC. A sole proprietorship, on the other hand, is a simple and easy way to start a business but with no limited liability protection.
Written by Anusha Das
What would you choose?
- One Person Company (OPC)
- Sole Proprietorship