Single Owner? Start Your One Person Company

A one-person company is a business entity that is owned and operated by a single individual. This type of company is also known as a solo entrepreneur or single-person enterprise. In a one-person company, the owner is responsible for all aspects of the business, including decision-making, operations, and finances.

One-person company are often preferred by individuals who value autonomy and flexibility in their work. With no partners or shareholders to answer to, the owner has complete control over the direction and strategy of the business. This allows them to make quick decisions and adapt to changes in the market or industry.

Before proceeding with OPC registration, it's essential to understand the specific eligibility criteria and limitations outlined for its formation under the Company Act. These requirements ensure that individuals establishing an OPC meet the necessary qualifications:

• Natural Person and Indian Citizen: Only individuals who are natural persons and Indian citizens are eligible to establish an OPC. Legal entities such as company or LLPs are not eligible to form an OPC company

• Resident in India: The promoter must be a resident of India, meaning they should have resided in India for at least 182 days during the previous calendar year.

• Minimum Authorised Capital: There is no requirement of having a minimum authorised or paid up capital in the OPC, a Company can be formed with a capital of even Re.

• Nominee Appointment: During incorporation, the promoter must appoint a nominee. This nominee would assume membership of the OPC in case of the promoter's death or incapacity.

• Restrictions on Certain Businesses: OPCs are prohibited from engaging in financial activities such as banking, insurance, or investments.

• Conversion to Private Limited Company: If the OPC's paid-up share capital exceeds Rs 50 lakhs or its average annual turnover surpasses Rs 2 Crores, it must convert into a private limited company to meet the regulatory standards required for larger businesses.

Additionally, it's important to note that an individual can establish only one OPC and an OPC cannot have a minor as its member.

• Limited Liability Protection: OPCs provide limited liability protection to the sole member. This ensures that the member’s assets are secure, and their liability is restricted to the amount of capital invested in the company. In case of business debts or legal issues, the member’s assets are not at risk.

• Separate Legal Entity: OPCs are acknowledged as distinct legal entities, ensuring continuity even if there is a change in the founder or owner. This provides credibility and trust in business transactions, allowing OPCs to build long-term relationships with clients, suppliers, and investors.

• Easy Funding and Investment Opportunities: As private limited entities, OPCs can attract external funding and investments.
  Entrepreneurs can use this advantage to secure capital for business expansion, equipment procurement, or research and development activities. Access to funding sources helps OPC company grow faster and increase profitability.

• Sole Decision Making: As the sole director of an OPC, you have complete control over decision-making without needing multiple stakeholders’ consent. This autonomy allows for quicker and more efficient execution of business strategies, enabling you to adapt to market changes swiftly.

• Minimal Compliance Requirements: OPCs require fewer compliance measures than other company structures, making them ideal for single entrepreneurs. With less paperwork and simplified procedures, business owners can concentrate more on core operations and growth initiatives.

These advantages make OPCs an attractive option for individual entrepreneurs seeking limited liability protection, easy funding, and streamlined operations.

Disadvantages of One Person Company (OPC)

• Limited Growth Potential: A one-person company can only have one member, which can limit its ability to raise capital and expand. Unlike OPC private limited company, OPCs cannot issue shares to multiple investors, restricting growth opportunities.

• Conversion Requirement:  If an OPC's paid-up capital exceeds ₹50 lakhs or its annual turnover surpasses ₹2 crores, it is required to convert to a private or public limited company. This required conversion can add more compliance and regulatory requirements.

• Higher Taxation: OPCs are taxed at a flat rate of 30% on their profits, which can be higher compared to individual tax rates. Additionally, OPCs do not qualify for certain tax advantages that are available to sole proprietorships and partnership firms.

• Single Ownership Limitation: The single-member structure means the owner must handle all responsibilities and decisions alone. This can be burdensome and challenging as the business grows.

• No Scope for Partnership: An OPC company is designed for a single entrepreneur, so there is no provision for bringing in partners or co-owners. This can be a disadvantage if the owner wants to collaborate or share business responsibilities with others.

• Obtain a Digital Signature Certificate (DSC): The sole director must get a Digital Signature Certificate (DSC) from a government-approved agency. This is needed for digitally signing forms and documents during registration.

• Apply for Director Identification Number (DIN): If the sole director of a company in India does not already have a Director Identification Number (DIN), they must apply for one. This number is necessary for anyone appointed as a director of a company operating in the country.

• Name Reservation: Select a distinctive name for your One person company and verify its availability on the Ministry of Corporate Affairs (MCA) portal. Once approved, submit the SPICe+ Part A form to reserve it.

• Prepare Documents: Prepare the required documents by drafting the Articles of Association (AOA) and Memorandum of Association (MOA). These documents outline the company's objectives, operational rules, and internal governance. Additionally, prepare Form INC-3, which includes the consent of the nominee. This nominee will assume membership in the event of the sole member's incapacity or demise.

• File Incorporation Form: Fill out and file the SPICe+ Part B form, ensuring you include all required documents.These documents include the MOA, AOA, proof of registered office address, identity and address proof of the director and nominee, and the Digital signature certificate of the director.

• Obtain Certificate of Incorporation: Once the Ministry of Corporate Affairs (MCA) verifies all your submitted documents, they will issue the Certificate of Incorporation (COI). This certificate will include the Company Identification Number (CIN), as well as the PAN and TAN for your OPC.

• Post-Incorporation Compliances: Open a bank account in the name of your OPC Pvt. ltd. for handling all financial transactions. Choose an auditor for your company within the initial 30 days after incorporation.File Form INC-20A, known as the Commencement of Business form, within 180 days of incorporation.

By following these steps, you can successfully register an OPC registration in India and ensure compliance with all legal requirements.

• Open a Bank Account: Once your OPC is registered, open a bank account in the company's name. Use this account for all business transactions, like receiving payments, making purchases, and handling salaries. This helps keep personal and business finances separate and maintains clear records.

• Appoint an Auditor: Within the first 30 days of incorporating your company, it's necessary to appoint a qualified auditor. This auditor will review and verify your company's financial records to ensure they are accurate and comply with accounting standards and regulations. This process is crucial for ensuring transparency and establishing trust with stakeholders.

• File Form INC-20A: Submit Form INC-20A, which is the Commencement of Business form, within 180 days of incorporation.. This form is a declaration by the directors that the company has received the paid-up share capital from its shareholders. Filing this form is mandatory to start business operations. Not filing it on time can result in penalties and restrictions on the company's activities.

• Maintain Statutory Registers and Records: Keep various statutory registers, such as the register of members, directors, and charges. These records are required by law and must be updated regularly. They provide transparency about the company’s operations and structure and are necessary for audits and inspections.

• Hold Board Meetings: Hold the first board meeting within 30 days of incorporation and at least one board meeting every six months after that. These meetings are essential for discussing and making important business decisions, reviewing company performance, and ensuring compliance with legal requirements.

• Comply with Annual Filing Requirements: Every year, ensure to submit the required annual returns and financial statements to the Registrar of Company (RoC). This includes the balance sheet, profit and loss statement, and auditor’s report. These filings are essential for regulatory compliance and give an overview of the company’s financial health and operations.

These steps ensure that your OPC company follows legal requirements, operates smoothly and builds credibility with stakeholders. Regularly monitoring these formalities and seeking professional guidance when needed can help maintain good governance and avoid potential penalties.

To start the OPC registration process for your One Person Company (OPC) in India smoothly, you'll need several important documents:

• Begin with a scanned copy of your current bank statement for documentation purposes. You can access this document online through your bank's website or by visiting a branch. Ensure it includes your account statement or transaction summary.

• Provide copies of your electricity, gas, phone, and mobile bills. These utility bills cover essential services such as electricity, gas, water/sewage, and waste disposal. Additional services like internet, cable TV, or phone services may also be included. Utility costs vary depending on your location, usage patterns, and local climate.

• Include a digital copy of your rental agreement, transcribed in English. Typically, rental agreements are provided as hard copies to tenants. Make sure to scan and submit this document in a digital format.

• Obtain a digital copy of the landowner's no-objection certificate for the registered business address, confirming their approval for using the premises for business purposes. According to Section 12 of The Company Act, 2013, every company must maintain a registered address. If there are any changes to the address after incorporation, you must file Form INC-22 with the Registrar of Company (ROC) to update the records.

• If you are the owner of the property where the company will be registered, ensure to submit a scanned copy of the property or sale deed in English. A sale deed is a legal document used in real estate transactions to prove the transfer of property ownership from the seller to the buyer. This documentation is crucial for completing the OPC registration process.

With these essential documents ready, you can begin your OPC registration process confidently and smoothly. This guide ensures you're well-prepared to take the initial steps toward establishing your dream company.

If you want to register an OPC company, then Instabiz Filling is a perfect choice. Our expert team has helped countless entrepreneurs set up their businesses. We can guide you through the entire process, from obtaining the necessary documents to obtaining the Certificate of Incorporation.

Here are some reasons why you should choose us for your OPC company registration:

• Expert Guidance: Our team of experienced professionals will provide you with expert guidance throughout the entire registration process. We will help you understand the legal requirements and assist you in preparing the necessary documents.

• Affordable Prices: We offer competitive pricing for our OPC company registration services. We understand the importance of cost-effectiveness when starting a business, which is why we offer our services at affordable prices.

• Quick Turnaround Time: At Instabiz Filling, we value your time and understand that delays can be costly. We prioritize completing the registration process promptly to minimize delays. We have a streamlined process that ensures your OPC company registration process is completed promptly and efficiently.

• Customer Satisfaction: We take pride in providing exceptional customer service. Our team is always available to answer any questions and will ensure that you are satisfied with our services.

In short, we are committed to providing hassle-free and seamless OPC company registration and Private Limited Company and LLP registration experience. Contact us today to begin your entrepreneurial journey!