The process of One Person Company registration is a forward-thinking concept which promotes the Incorporation of micro-businesses with persons having entrepreneurial dreams but has limited time, resources or means to execute the business plan. It is the combinaftion of Sole proprietorship and standard company, where the OPC would enjoy the best of two worlds.
What Is One Person Company?
Under Section 2(62) of Companies Act, One Person Company is defined as a company operated by an individual who is both a shareholder as well as a director at the same time.
The One Person Company is appropriate for a small business which has an average turnover of INR 2 Crores. The maximum amount of capital is limited to INR 50 Lac. An OPC can have more than one director and must be an Indian Resident.
Who is allowed to go for One Person Company Registration?
Only Indian residents are allowed to One Person Company registration. Besides, only one entity is allowed to be set up by the Ministry of Corporate Affairs.
What are the Advantages of a One Person Company Registration?
Limited liability
The director’s personal property is always safe, no matter concerning the debts of the business.
Continous existence
OPC has a separate legal identity. In case of death of the owner, the Company would pass on to the nominee director.
Greater credibility
OPC is more trusted among vendors and lending institutions.
Easy funding
It is easy for OPC to raise funds using venture capital.
Single Owner
Only the owner helps in quick decision-making, controlling and managing the business without any long processes and methodologies as approved in other companies. The insight of belonging inspires to grow the business further.
Read our article:A Complete Guide on One Person Company Registration in India
Credit rating
The One Person Company with bad credit evaluation may not even get the loan. The credit rating of OPC will not be material if the OPC rating is based on the companies’ norms.
Benefits under Income Tax
Any compensation paid to the director will be allowed as deduction as per income tax, unlike proprietorship.
What is the Eligibility Criterion?
The eligibility criteria are as follows:-
- Citizen of India;
- Can incorporate one-person Company;
- Can be a nominee for the member of the Company
- Should be staying in India for at least 182 days from the previous year.
- If the turnover exceeds Rs 2 crores, OPC has to be turned into a Private Limited Company within six months
Documents Required for the Process of One Person Company Registration
Documents required for One Person Company are as follows:-
Documents To Be Given By The Director
- Scanned copy of PAN;
- Scanned copy of Voter ID or Driver’s License;
- Scanned copy of Current Bank Account Statement or Mobile Invoice or Electricity bill;
- Scanned passport-sized photo.
Documents Necessary For The Registered Office
- Proof of registered address;
- Copy of rent agreement;
- No objection certificate from the landowner of concerned property;
- Copy of sale deed
Process of One Person Company Registration
The process of One Person Company are given below:-
Apply for DSC
Digital Signature Certificate is used for signing documents on any online platform it has the same value as any physical sign. The director of the company are required to obtain DSC. It can be obtained from nearby organisation. The fee for getting DSC depends on the organization. The First Step to obtain the Digital Signature Certificate of the Director which requires the following:-
- Address Proof
- Aadhaar card
- PAN
- Photo
- Email Id
- Contact Number
Required Documents
The documents to be submitted to the Registrar of Company are-
- The Memorandum of Association (MoA)
- The Articles of the Association (AoA)
- There is only 1 Director and a member so it is necessary to appoint a nominee because if the owner dies and cannot perform his duties, the nominee will act on behalf of the director and take his place.
- Registered Office proof along with the evidence of ownership and a NOC from the owner.
- A declaration that all compliances have been followed.
Application to Obtain DIN
The director of the one person company has to acquire Directors Identification Number. It can be filed along with SPICe+ form. The director has to provide the name and residential.
Name Approval of the Company
After obtaining DIN and DSC by the director, they have to decide the name of the company. The MCA should agree upon the name of the company. The approved format for the name of OPC is “ABC (OPC) Private Limited.”
Filing of Incorporation form
The incorporation form has to be filed along with the documents mentioned above.
Approval of forms by MCA
Ministry of corporate affairs[1] will verify the forms submitted and approve the forms after verification.
Issue of Certificate of Incorporation
After the applicant has uploaded PAN and TAN of the company, the concerned establishment will verify the documents as well the information provided by the applicant.
Once the authentication is done by the authorities. The Registrar of Companies is satisfied by the application forms and documents, the certificate of incorporation will be issued, that contain CIN number.
What are the Post Compliances for One Person Company registration?
Every One Person Company must follow the necessary compliances:-
- Board meetings have to be held every six months. The time gap should not be less than 90 days;
- Book of accounts has to be adequately maintained;
- Statutory audit by Charted Accountant
- Income tax returns have to be file every 30th September.
Conclusion
A new concept of One Person Company was introduced by the Companies Act,2013. The process of One Person Company Registration offers some distinctive features which make a difference between one person company and a Private Limited company, Limited liability partnership, and another similar form of business.
Our Corpbiz group will be at your disposal if you seek expert advice on any aspect related to One Person Company with complete compliance. We will help you guarantee full compliance concerning all the requirements based on your anticipated activities, ensuring the productive and well-timed completion of your expectation.
Read our article:Everything you need to know about One Person Company in India
