The Complete Guide to Registering a One Person Company, OPC In India
The fact that starting a business today is relatively easy does so much owe to situations like the One Person Company (OPC). If you are an individual planning to start a business or small business person, registering an OPC is something that can help you do so. This guide will educate you on how to register One Person Company (OPC) in India, explain to you why it’s advantageous to do so and also explain why engaging the services of a professional Chartered Accountant will help to ease the process.
You ask what a One Person Company (OPC).
A One Person Company is a company structure designed for a single individual to form a company, yet still enjoy limited liability. The concept was introduced under the Companies Act, 2013 to help solo entrepreneurs and small businesses get systematic assistance of limited liability, easy controls and better trust ability.
What’s the importance of OPC Registration?
· Legal Entity Status: The owner of an OPC is separate legal entity from OPC and it provides limited liability protection.
· Limited Liability Protection: This helps protect your personal assets if your business loses or becomes bankrupted.
· Tax Benefits: Small businesses have some great benefits and tax exemptions that OPCS do, like for example.
· Increased Credibility: Registering your business boosts your business's credibility with investors, clients and even financial institutions.
· Ability to Raise Funds: Unregistered businesses can only raise funds from investors or bank loans, whereas a similar registered business can.
Why Should You Register an OPC?
1. Limited Liability Protection: But the most benefit of OPC is the protection of personal assets. The OPC is a separate legal entity which means the business’ owner’s personal property is not at risk if the business is going through financial difficulties.
2. Simplified Compliance: One of the benefits of OPCs is that they enjoy fewer regulatory and compliance requirements, compared to private limited companies, and are ideal for the solo entrepreneur and small business. OPC is exempt for conducting annual general meetings (AGMs) or lots of directors.
3. Tax Benefits under ITD Act: If your business turnover is low, you qualify for tax exemptions and other benefits under the Income Tax Act. Furthermore, while OPCs may have a lower corporate tax rate than the personal tax rates of individual owners.
4. Easy Fund Raising: Although they have a formal company structure and can thus raise capital through investment or loans to grow, they take a long time to establish themselves as a feasible and profitable investment option. By sole proprietorships, this is not possible.
5. Perpetual Succession: In contrast to a sole proprietorship, the existence of the OPC is not affected if the sole member, dies. In fact, at the time it registers, the nominee can step in and take over the running of the business’s operations without any interruption.
6. Separate Legal Entity: The OPC is legally recognized as a distinct individual who enhances the relationship between the clients, investors, and financial institutions and provides or creates new more business.
OPC stands for One Person Company and the eligibility criterion for its registration is one person who wants to start his own proprietary business.
Before registering your OPC, you must meet the following eligibility criteria:
1. One Shareholder: The company should be having only one member and that member should be an Indian citizen and resident of India only.
2. Director Requirement: The OPC shall always have at least one director resident in India who shall also be a director of the OPC. The director cannot be younger than a majority.
3. Registered Office: The OPC should have the date incorporated and the date incorporated of the Secretary should be within a period of not more than 60 days before the first meeting.
4. Minimum Authorized Capital: As per the OPC, the minimum capital requirement is Rs 1 Lakh but for OPC depending on the business type OPC amount may vary.
5. Nominee: Management is to be continued by a nominee to be appointed at the time of registration in case the owner dies or becomes incapacitated. Only an inconvenience that this nominee can be a foreign national.
A Step by Step Guide on How to Register One Person Company (OPC) in India
Follow these simple steps to register your OPC:
Step 1: Attract Digital Signature Certificate (DSC)
Firstly, you need a Digital Signature Certificate(DSC) so that you can sign all the documents digitally. Sole member as well as the proposed director both have their DSCs.
Step 2: Get Director Identification Number (DIN)
The proposed director of the OPC requires a DIN. The Ministry of Corporate Affairs (MCA) has a DIN application gateway.
Step 3: Name Reservation
Give your OPC a name that’s wholly unique, and can follow the MCA guidelines. To that, you can apply for name approval through Form SPICe+ available on the MCA portal.
Step 4: Incorporate your Company
After the name is approved you have to submit application in FormSPICe+ which is standing for Simplified Proforma for Incorporating Company – electronically. To the form, you will also be required to attach the Memorandum of Association (MOA) and the Article of Association (AOA).
Step 5: Certificate of Incorporation
After successful verification of your application, Ministry of Corporate Affairs(MCA) will issued the Certificate of Incorporation. Your OPC has been successfully registered. Apply for a PAN number and TAN for your OPC. Get a company bank account.
• Holds statutory registers (directors, shareholders, etc.)Views and approves your application, You will then obtain the Certificate of Incorporation. This is the successful registration of your OPC.
Step 6: Post-Incorporation Compliance
After receiving the incorporation certificate, complete the following steps:
· Obtain PAN and TAN for your OPC.
· Open a company bank account.
· Maintain statutory registers (directors, shareholders, etc.).
Here is a list of documents required for OPC Registration
Ø For the Sole Member:
· Proof of identity (Aadhaar card, passport, etc.)
· Proof of address (utility bills, bank statements, etc.)
Ø For the Director:
· Proof of identity and address (similar to the promoter).
· For the Registered Office:
· Address proof (rent agreement, utility bills, etc.)
Ø Other Documents:
· Memorandum of Association (MOA)
· Articles of Association (AOA)
· Declaration from the proposed director(s) about their consent to act as directors.
Before Starting an OPC, Here is some points that you should consider:-
Taxation Implications
You pay the corporate tax rate to OPCs, which is usually lower than the personal tax rates. OPCs may also have to apply for GST registration, if the turnover exceeds the specified threshold.
Compliance and Annual Filings
Though OPC’s require considerably fewer compliance than private limited companies, they are still required to file annual returns to the Ministry of Corporate Affairs (MCA). In addition, the annual financial records of the company must be audited.
Capital Structure
The amount of minimum capital for the OPC registration is ? 1 lakh.
Advantages of Hiring a Chartered Accountant for registering OPC
Legal Compliance and Expert guidance
A CA is a person who makes sure all legal formalities are followed, from the company registration to filing annual returns. They reduce delays and problems.
Document Preparation
CAs play an important role in helping OPCs take advantage along tax benefit routes and efficient financial structuring.
Post-Registration Support
Once registered, your OPC will be allowed to account, file GST, be subjected to audits and continue to maintain statutory compliance.
Opportunities and Challenges in OPC Registration and Elimination of them
1. Delay in Name Approval:
· Solution: Choose a non-generic, unique name avoiding the court of the law.
2. Incorrect Documentation:
· Solution: Make sure all documents are all accurate and precise. Any problems can be resolved by consulting a CA.
3. Tax and Compliance Misunderstandings:
· Solution: Get professional advice concerning the financial and tax aspects of OPC registration.
Conclusion
Among other advantages registering an OPC in India provides includes limited liability protection, simplified compliance and the ability to raise funds. With the right help, it can be done without any fuss. By hiring a Chartered Accountant (CA), we guarantee that you follow all legal and financial rules so that you can concentrate on increasing your business.
We’re ready to help you register your One Person Company (OPC). Contact us today and let us guide you through registration with ease.
__________________________________________
Ready to register your One Person Company (OPC)?
Contact us today for a free consultation and let us help you navigate the registration process with ease.