What are the benefits of OPC?
What are the benefits of OPC?
The Companies Act 2013 established India’s One Person Company (OPC). It benefits one person to own and manage their company and gain the advantages of both a sole proprietorship and a corporation. The Companies Act of 2013’s implementation made this idea possible.
The primary objective of One Person Company was to encourage entrepreneurship and MSMEs’ corporatization. It gives all the benefits of a Private Limited Corporation, such as perpetual succession, being a distinct legal entity, and protecting individual assets from the firm’s obligations.
Benefits of OPC
- The primary benefit of a One Person Company is that it allows for greater control and flexibility for the individual running the business. Unlike a partnership firm or a Limited Liability Partnership (LLP) firm, the sole shareholder has complete control over the company’s decision-making process.
- Another advantage of a One Person Company is that it requires fewer compliances than other business forms. The company is only required to file an annual return and has no other compliances such as audits or filing of balance sheets. This makes it very attractive for small businesses just starting and needing to focus on growth.
- The taxation benefits are also desirable. One-Person Companies are treated as separate entities for taxation purposes, and the profits are taxed at a lower rate than those of a partnership firm or LLP. This makes a One Person Company a viable option for entrepreneurs who wish to save on their tax bills.
- In addition, a One Person Company also has certain advantages when raising capital. It can have a maximum of 200 shareholders, making raising funds through equity investments easier for the business. Moreover, the company can borrow funds from banks and other financial institutions, giving it more significant resources.
Eligibility criteria for OPC
Starting a One Person Company (OPC) has been made more accessible by the Indian Government to enable budding entrepreneurs to start their businesses.
To register an OPC, specific criteria need to be fulfilled. These criteria include:
- The individual should be an Indian citizen and resident of India.
- The individual should not be a minor, i.e., they should be of 18 years or above.
- The individual should not be a Promoter or a Director in any other company.
- The individual should not have incorporated more than one OPC.
- The individual should not have any existing OPC in operation.
- The individual should not have been declared a person of unsound mind by any court.
- The individual should not be convicted of any offense related to a company’s promotion, formation or management.
- The individual should not be disqualified from being a company director.
Once all the eligibility criteria are fulfilled, the individual can proceed with the registration process for the OPC. The process involves applying with the Registrar of Companies (ROC) along with the necessary documents. After the application is filed, the ROC will take a few days to process it and issue the Certificate of Incorporation. After that, the individual can start the business operations of the OPC Company.
Overall, a One Person Company is an attractive option for entrepreneurs who wish to have complete control over their business without sacrificing the benefits of limited liability. The flexibility and ease of operations, along with the taxation and capital raising advantages, make a One Person Company an excellent choice for those looking to start their own business.