One Person Company (OPC) Registration
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A one person company is a company which contains exactly one member.It is a separate legal entity from its promoter and the promoter has limited liability.
One person company is a new concept in India which has been introduced by the companies act 2013. In the old Companies act 1956 a minimum of two directors and shareholders were required to form a private limited company. However in case of a One person company, only 1 person is required who can be a shareholder as well as the Director. Hence the name, One Person Company.
Entrepreneurs who are capable of starting a venture on their own can make use of one person company (OPC) in India. In one person company, there is only one shareholder who is an Indian citizen and Indian resident i.e. stayed in India for at least 182 days in the preceding year.
The concept opens up spectacular possibilities for sole proprietors and entrepreneur who can take the the advantages of Limited liability and corporatization but were held back in doing so because of the requirements of finding a second director or second shareholder.
Benefits | Advantages of One Person Company are:
- Separate legal entity: The OPC enjoys the status of a separate legal entity from its promoters. Therefore, the entrepreneur is capable of doing what he/she wants.
- Easy funding: It is easier for OPC to raise funds through venture capital, financial institution or angel funding. One may even choose to raise funds by converting into a private limited company.
- Limited liability: The liability of the OPC is limited to the extent of the share held by the individual. Therefore, it enables the individual to take more risk in business. More opportunities are provided without affecting or suffering a loss of personal assets.
- Benefits of being a small scale industry: Benefits can be availed by achieving a lower rate of interest on loans, easy funding from banks without a security deposit, etc. All these benefits help to establish a business in its initial years.
- Taxation benefits: Unlike proprietorship, as per the Income Tax Law, any remuneration paid to the director of an OPC will be allowed as deduction.
- Increased trust: Company form of business allows an increased trust and prestige than the other forms of business.
- Receive interest on late payment: Under the Enterprises Development Act, 2006, an OPC can avail benefits because it is newly start-up, micro, small or medium. It is entitled to receive interest that is three times the bank rate.
- Compliance requirement: The compliance requirements are lesser in comparison to the private company.