How to Start an OPC in India?
How to Start an OPC in India?
Starting a business on your own can be an exhilarating journey, and when it comes to limiting your liability while enjoying the perks of a corporate entity, registering as a One Person Company (OPC) in India is an increasingly popular choice among entrepreneurs. This model combines the simplicity of a sole proprietorship with the benefits of a private limited company, making it an attractive option for many. Understanding how to start a One Person Company in India is crucial for individuals venturing into entrepreneurship. This comprehensive guide explores how to start OPC in India, delving into the eligibility criteria, necessary documentation, major benefits, and the step-by-step process.
IndiaFilings can guide you through starting an OPC in India, ensuring a smooth and hassle-free setup for your business.
Register Now!OPC – One Person Company (OPC)
Introduced in 2013 under the Companies Act, One Person Company (OPC) in India allows a single individual to establish a company, blending the benefits of a sole proprietorship and a traditional company structure. This initiative aims to foster entrepreneurship and formalize Micro, Small, and Medium Enterprises (MSMEs). According to Section 2(62) of the Companies Act 2013, a company can be formed with just one director and one member, who can be the same individual.
Eligibility Criteria to Start an OPC
To register a One Person Company (OPC) in India, there are specific eligibility criteria that both the individual and the company must meet. Here are the key requirements:
- Natural Person: The individual intending to register an OPC must be a natural person, meaning a human being and not an artificial entity like a corporation or a trust.
- Indian Citizen: The individual must be an Indian citizen. Foreign nationals or non-resident Indians (NRIs) are not eligible to register an OPC.
- Residency: The individual must be a resident in India for at least 182 days during the previous calendar year. This criterion ensures that the OPC is owned and managed by individuals with substantial ties to the country.
- Minimum Authorized Capital: The OPC must have a minimum authorized capital of Rs 1,00,000. This capital requirement ensures that the OPC has the necessary financial resources to conduct its business activities.
- Nominee Appointment: In case the sole member of the OPC is incapacitated or passes away, a nominee must be appointed who can take over the management and ownership of the OPC. The nominee must be a natural person who is an Indian citizen and resident of India.
Documents Required to Start an OPC
To smoothly navigate the process and start an OPC in India online, you’ll need the following documents:
- A completed Application form
- Identity Proof: Self-attested copy of the PAN card for Indian nationals or passport for foreign nationals
- Address Proof: Any valid proof like a passport, voter ID, driver’s license, or utility bill not older than two months
- The address proof should be not older than 12 months for foreign nationals.
Major Reasons to Incorporate an OPC in India
There are many reasons why setting up an OPC in India is advantageous. Here are some of the key benefits:
- Separate Legal Entity: An OPC enjoys a separate legal status, limiting members’ liability to their share contributions and protecting personal assets from business liabilities.
- Ease of Fundraising: Being a distinct legal entity, an OPC can raise funds more easily than sole proprietorships, making securing loans and attracting investments simpler.
- Fewer Compliances: OPCs enjoy certain exemptions under the Companies Act of 2013, reducing the compliance burden significantly.
- Simplified Incorporation and Management: Forming and managing an OPC is straightforward. Only one member and nominee are required, ensuring quick decision-making and operational efficiency.
- Perpetual Succession: Including a nominee ensures the company continues even after the member’s demise, providing business continuity.
How to start a one-person company in India?
Starting a One Person Company (OPC) in India is a favourable route for entrepreneurs who wish to enjoy the benefits of a corporate structure while maintaining singular control over their business. The OPC structure allows you full authority over the company while safeguarding personal assets against business liabilities. Here are the detailed steps involved in starting an OPC in India:
Step 1: Obtain a Digital Signature Certificate (DSC)
The first step is to obtain a Digital Signature Certificate (DSC) for the sole director of the OPC. Since all documents need to be submitted electronically, the DSC is required to sign all the forms on the Ministry of Corporate Affairs (MCA) portal.
Step 2: Acquire Director Identification Number (DIN)
Next, you must acquire a Director Identification Number (DIN) for the director. DIN is a unique identification number issued by the MCA, mandatory for anyone who wants to be a director in an Indian company.
Step 3: Name Approval
Before incorporating an OPC, you must get approval for your company’s name. The proposed name must be unique and should not resemble the names of any existing companies or trademarks in India. You can file for name approval through the MCA portal’s RUN (Reserve Unique Name) service.
Step 4: Prepare a Memorandum of Association (MOA) and Articles of Association (AOA)
The Memorandum of Association (MOA) states the main, ancillary or subsidiary, and other company objectives. The Articles of Association (AOA) lays down the by-laws on which the company will operate. Since the OPC is incorporated as a private limited company, the MOA and AOA must be drafted carefully.
Step 5: File Incorporation Documents
Once the name is approved, you can file for incorporation through the SPICe+ form (Simplified Proforma for Incorporating Company electronically Plus) available on the MCA portal. Along with the SPICe+ form, you will need to submit the following documents:
- DSC of the Director
- DIN of the Director
- Consent of Nominee: In Form INC-3, along with the nominee’s PAN and Aadhar cards.
- Proof of Registered Office: Like a recent utility bill and a NOC from the property owner.
- Declaration and Consent of the Director: In Form INC-9 and DIR-2 respectively.
Step 6: PAN and TAN Application
You can apply for the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) through the same SPICe+ form. This streamlines the process and eliminates the need for applying separately.
Step 7: Obtain a Certificate of Incorporation
After submitting documents and forms, the Registrar of Companies (RoC) will examine the application. Once the RoC is satisfied, the Certificate of Incorporation will be issued. This certificate proves the company is registered and includes the CIN (Corporate Identity Number).
Step 8: Open a Bank Account
With the Certificate of Incorporation, PAN, and TAN, you can open a bank account for your OPC to commence your business operations.
Step 9: Appointment of Auditor
The OPC must appoint a statutory auditor within 30 days of incorporation. The auditor will audit the company’s accounts and report on the financial statements.
Step 10: Commencement of Business Certificate
Obtaining a Commencement of Business Certificate is not necessary for an OPC as per the Companies (Amendment) Ordinance, 2019. However, the company must ensure compliance with all other legal requirements and statutory registrations as per its business needs.
By following these steps meticulously, you can successfully start an OPC in India, setting a strong foundation for your business while enjoying the benefits of limited liability and less compliance.
Conclusion
In summary, knowing how to start OPC in India is essential for solo entrepreneurs looking for the benefits of a corporate setup while maintaining full control. The process is straightforward, from meeting the eligibility criteria to submitting the required documents and completing the incorporation steps. OPCs offer significant advantages like limited liability, ease of raising funds, minimal compliance, and easy management, making it an attractive option for individuals.
Start an OPC in india online with IndiaFilings.
IndiaFilings makes starting an OPC in India easy. We guide you through the registration process so you can focus on growing your business. Contact IndiaFilings today to get started on your business journey.
Register Now!