The most important benefit of establishing One Person Company is that the owner is solely responsible for all the affairs. The matters of the company have less liability and enjoy benefits similar to that of Private Limited Company. The owner is exclusively the most powerful authority for one Person Company.
According to Section 2(62) of the Companies Act, 2013, OPC means a company consisting of only one person as an exclusive member. In general, it is a company registered and maintained by a single person. Entrepreneurs prefer this type of company over Sole proprietorship so that they can copy their company to overcome the complexity faced in the sole proprietorship firm registration.
What is the Nature of a One Person Company?
An OPC can be registered as a Private Limited Company. The provisions that aaplies to a private company will exist on any OPC unless it is expressly excluded in the concerned Act or rules.
A One Person Company can easily be changed into a Private Limited Company or a Public Company. It is important to know that “One Person Company” must necessarily be mentioned at the end of the company’s name. OPC Registration offers a great number of advantages over other company types. In this Blog we are going to cover all the benefits of OPC.
Advantages of One Person Company
The benefits of OPC are as follows-
Benefits of being Small Scale Industries
OPC can experience various benefits provided to Small Scale Industries (SSI) like easy funding from bank and any safety to a specific limit, a lower interest rate on loans, and OPC can also have various benefits under Foreign Trade policy and other related policies.
Single owner is helpful as compared in having more than one owner. It is highly favorable in making a quick decision, managing business without any interference, or any suggestions from other person. The sense of belonging motivates to grow the business.
Read our article:Step By Step Process of One Person Company Registration
OPC with a bad credit score can still apply for the loan. The credit score of One Person Company is not material if the score of OPC is according to the norms.
Benefits under Income Tax Law
The One Person Companies are eligible for deductions under the Income Tax Law. They are as follows-
|Income Tax Rate||30%|
|Surcharge|| 7% – total income exceeds INR 1 crore but less than INR 10 crore. 12% – total income increases INR 10 crores.|
|Taxed as||Domestic Company|
|Salary||Director’s salary is allowed as expenses|
|Interest & |
|Considered as taxable income|
|Loans||When repaid, loans to directors are taxable|
Received Interest rate on any Late Payment
OPC can enjoy all the benefits under Enterprises Development Act, 2006 as the newly incorporated OPC is Micro, Small, or Medium which are covered under the above mentioned act. According to this, if the buyer or sellers receives any late payment then they are entitled to receive interest rate which is three times the rate of bank.
Increase in Trust and status
Any business which runs in the form of the company always enjoys an increased trust and status.
If a company is a private limited company; One Person Company can raise funds using venture capital, angel investors, financial institutions etc. Any OPC can raise funds thus graduating itself to a private company.
One of the benefits of OPC is that it has more chances, has limited liability since the liability of the One Person Company is limited to the extent of the value of the share, and the individual can take more risk in business without distressing or suffering the loss of any personal assets. It is a type of encouragement to new, young and innovative business start-ups.
- Same director and shareholder;
- Minimum 1 Shareholder;
- Minimum 1 Nominee;
- Minimum 1 Director;
- Letters ‘OPC’ has to be suffixed with the name of OPCs to differentiate it from other companies.
What are the Annual Compliances regarding the One Person Company?
- Statutory Audit should be done by any Practicing Chartered Accountant;
- Minimum two Board Meetings is required to be held;
- Maintenance of the Statutory Registers and Minutes;
- Filing of Form MGT-7 for the annual return;
- Filing of Form- AOC-4 for the financial statement;
- Filling of an ITR;
- Appointment of an Auditor;
- Annual Filing to the Registrar of Companies.
The owner is exclusively the most important authority of OPC. Registering this type of company offers a great number of benefits of OPC. An OPC can only be registered as a Private Limited Company. All the provisions that applies to a private company will exist on OPC unless it is excluded in the concerned Act or rules. CorpBiz shall be at your disposal if you want to establish/incorporate any company. Kindly let us know if you have any query regarding the same.
Read our article:Know all the Documents Required for OPC Registration