Advantages and Disadvantages of a One Person Company

What is One Person Company

The OPC Registration in India was started as a concept under the Companies Act, 2013 which has the following features, a single person can form a company like a sole trader and also has all the features of a company.

The rationale for the introduction of one-person companies was to spur small business, and to legalize the MSME business entities. Concerning the legal obligations, current Indian Companies Act 2013 indicates that it is possible to establish a company with the minimum of one director and one member, but it is more interesting that the director and the member can be one person. Hence, One Person Company Registration is one of the possibilities to create a limited liability company in India for one person. This is the criteria and steps which are followed for registration of one person company.

Advantages of a One-Person Company

• Legal Status: An OPC obtains a distinct legal personality, which benefits the particular person, who began the firm, since that particular individual is shielded from liability for the company’s losses. 

• Easy Fundraising: As OPCs are private entities they are in the position to organise funds from Venture Capitalists, Angels and Banks which proprietorship firms cannot do. 

• Reduced Compliance: With regard to the structural aspect, similar to the previous one, OPCs are provided with an exclusionary treatment in the occurrence of certain legal regulations of the Companies Act, 2013 due to the simplified administration responsibilities. 

• Simple Incorporation: It is in a dimension to be annexed at one package, one nominee and the said single member is the director. This form of business does not have a ‘paid-up capital hence, the incorporation of this type of business is easier. 

•  Efficient Management: Since OPC is being handled by one person, there is quick decision making; this will minimize on the management issues that may affect the performance of the company while at the same time eliminating on conflicts that takes alot of time in making the most important decisions. 

•  Perpetual Succession: OPCs have an aspect of perpetual succession; this implies the company will continue to exist even when it is just counting a single member. 

 In other words, OPCs have certain advantages, namely no or negligible liability, general overview in fundraising, less paperwork and regulations, simple formation and management of an OPC company and perpetual succession.

Conclusion

In brief, starting a business with one person as the whole team gives an opportunity to experience entrepreneurship without a lot of risk. Additionally, you should be aware of the risks involved in running your business solely and what skills an employee could bring to improve the business. Because of these factors, entrepreneurs know how best to set up their businesses to achieve their goals.

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