The conviction of One Person Company was originated through the company’s act, 2013, in order to support entrepreneurs who are on their own, are capable of establishing a single person economic entity. One of the biggest advantages of one Person Company is that there can be only one person in the company. While in the case of private limited company or LLP (Limited liability partnership) minimum of two members are required for incorporating. A one-person company is a company is a separate legal entity offering limited liability protection to its shareholders, Easy to incorporate and have a continuity of business.
One person company is the best enterprise for those who don't like to work under others and are looking for the benefits or private limited company. Though a one person company allows entrepreneur to operate a corporate entity with limited liability protection but on the other it does have a few disadvantages too like every one person company must nominate a nominee director in the AOA and MOA of the company who will be the owner of the one person company is the director is not available and also a one-person company is converted to a private limited company if its annual turnover crosses Rs.2 crores and it should also file an audited financial statements with the ministry of corporate affairs at the end of each year like all types of companies. All the load or management falls on the shoulders of a single person i.e. the owner of one Person Company. It is a great disadvantage because it is quite not possible to carry out the management of the whole company alone. Nevertheless, One person company is gaining immense popularity.
It gained wide popularity since the last recent years. It has become one of the most sought after entities to start one business after the private limited company. It has the benefits of both private limited company and a sole proprietorship. It provides various advantages such as limited liability, separate legal entity just like the private limited company. If we count the number of small enterprises being set up, Sole proprietorship still leads because it has no cost of establishing and also have an easiest
Registration of one person company (OPC) is governed by the ministry of corporate affairs, Under companies act, 2013 and the companies incorporation rule 2014. Some of the unique features of one person company are limited liability protection to shareholders, the ability or raise the equity funds, separate legal entity status and the perpetual existence make it one of the most recommended types of business entity for small and medium-sized businesses that are owned by family or professionally managed.
It takes about 10-12 working days for the registration of one person company procedure, subject to the government processing time and the client document submission.
1. Limited liability
Unlike public limited company and private limited company, one person company holds the entire share and has a right to operate over the business. So, it can be illuminated that the liability of a person will be to the extent he has invested in the business.
2. No Transferability of shares
One person company has only one shareholder that means transferring a portion of shares does not arise at all because it is done the company will not be one person company. Transferring all the shares is also not allowed as it will change the entire structure of the company because the owner of the company is changing. Interpretation of the law may provide us with the explanation that the transfer of shares is not allowed in one person company.
3. Separate property
As one person company gains its own identity and functions as a separate legal identity, it will have its own separate property. Members of one person company will not have any insurable rights in the assets of the company.
4. Continuity of existence
The life of one Person Company will not be affected by the status of shareholders and even after the death of shareholders the company will continue its existence. That is the reason why single person company owners will be benefited from the registration of one Person Company.
1. High tax rate
This is the big disadvantage of One Person Company. In the case of proprietary you are required to pay according to your salary at 10%, 20% or 30% but in the case of one person company you are directly charged 30% tax.
2. One person management
In one person company (OPC) shareholder is one and all the decisions are done by that shareholder. Management responsibilities will be on the shoulders of one person which is not an easy job at all. The company's success and growth all are dependent on one person's decision-making ability.
3. Higher incorporation cost
They are needed to be registered with the registrar of companies under the Companies Act, 2013. This would entail the upfront expenditure on government charges and you will have to pay professional charges to your CA or CS. Whereas, in proprietorships, there is no need to register with the government and hence don't have to pay these incorporation charges.
4. Consistency cost
The compliance cost of one person company is very high as compared to a partnership firm or proprietary.
PAN card of director
Passport size photograph of the director
Address proof of director(Voter Id / Driving License / Passport)
Address proof of business premises
Utility bills of business premises.
Identity proof of the nominee
Bank Statement of director
Step 1: Apply for DSC The first step in the process of one person company registration is to obtain Digital Signature certificate (DSC) of the proposed director which required documents like Address proof, PAN card, Aadhaar card, Email id, Phone number, photo
Step 2: Apply for DIN Once the DSC (Digital signature certificate) is obtained next step is to apply for Director Identification number of the proposed director of SPICe Form along with the name and address proof of the director.
Step 3:Name approval application: The next step while establishing a one-person company is to decide the name of the company. The name of the company will be in the form "XYZ (OPC) private limited.
Step 4:Documents required
The following documents are required to prepare for the registration of a person company.
a. MOA (Memorandum of Association) which are the objects that are followed by the company or the business for which the company is going to be incorporated.
b. AOA (Articles of Association) Which lays down the regulations and bylaws on which the company will operate.
c. Since there is only one director of a company, therefore, a nominee has to be appointed on behalf of such person because in case he dies or unable to perform his duties the nominee appointed will perform on behalf of the director and take his place. His consent will be taken along with this Aadhar card and PAN card in Form INC-3.
d. Proof of the registered office of the company along with the proof of ownership and also NOC from the owner
e. A declaration was given by the professional certifying that all the compliances have been made.
Step 5: Filling form with MCA All these documents which are collected will be attached to SPICe-MOA, SPICe-AOA and SPICe Form along with with the DSC (Digital signature certificate) of the director and professional, and will be uploaded on MCA site for approval. Form 49A and 49B will be generated for the PAN and TAN generation of the company after uploading the above documents. Which they have to be uploaded to MCA after affixing the DSC of the proposed director.
Step 6: Issue of the incorporation certificate:
On successful verification, the registrar of a company (ROC) will issue an incorporation certificate and therefore, you can begin your business.