According to the Income Tax Act and the Companies Act, One Person Companies (OPCs) are obligated to maintain compliance. Thus, filing an income tax return with the Income Tax Department and an annual return with the Ministry of Corporate Affairs are the major components of maintaining annual compliances for One Person Company. One-person businesses may additionally need to follow TDS laws, GST regulations, VAT/CST regulations, service tax regulations, and others in addition to the fundamental compliance requirements. The regulatory requirements for a one-person business would vary depending on the sector, the state of incorporation, the number of staff members, and the volume of sales. Scroll down to check mandatory annual compliances for One Person Company.
OPC Characteristics in India
The following are some crucial characteristics of an OPC firm in India:
It’s A Privately Held Business
The Companies Act’s Section 3(1)(c) makes it clear that in all legal proceedings and disputes, an OPC shall be treated as a Private Limited Corporation. An OPC will be subject to all current laws and regulations that apply to private companies.
The OPC’s lone shareholder must designate a nominee at the time of the One Person Company Registration. The nominee is the person who will take over as the OPC’s Indian shareholder in the case of the owner’s death or incapacity.
When an OPC’s only member passes away, the nominee has the option of being rejected or choosing to take their place as the OPC’s lone member. A Solo Proprietorship is not eligible for this choice.
No Required Minimum Paid-Up Capital
The minimum paid-up capital for a one-person company is not specifically specified under the Companies Act.
Number of Directors
A minimum of one director and a maximum of 15 directors may be appointed to an OPC. To add more directors, OPC’s have to submit a resolution.
Why Is Requirements For Annual Compliances For One Person Company Important?
The management of a one-person business is not simple. Those who are considering starting a business frequently are not aware of the crucial compliances that must be fulfilled legally; failure to do so might result in the business paying substantial fines. The corporation and its directors may potentially be subject to undertakings and additional investigations in addition to fines. It is important to note that a One-Person Corporation is qualified to undertake yearly compliances as soon as it is incorporated.
Penalties and fines associated with non-compliances cause a variety of difficulties for the business. It is crucial to be aware of and adhere to the relevant compliances in order to avoid such scenarios. It is necessary for a one-person business to disclose to shareholders and investors its precise financial situation.
What Are The Advantages Of Annual Compliances For One Person Company?
A one-person business can profit from a number of things, including:
- Minimal protection against responsibility.
- Improve your chances of receiving funding from financial sponsors.
- Permanent state.
The OPC member must adhere to the following requirements in order to increase investor confidence:
- Corporate Law.
- GST and income taxes.
The requirements for annual compliances for One Person Company has now been raised as of the year 2018. Regardless of ROC compliances, companies must file annual filing forms by September 30 each year. The standard essential has been enhanced for OPC Corporations as of the year 2018. The benefits of doing annual compliances for One Person Company are listed below.
Easy To Gain Support from a Financial Speculator
A company’s proper yearly compliances, including those with the OPC, increase the confidence of financial speculators and make it simple to gain their support.
Active Status Is Provided
Timely and accurate compliances are important for keeping the organisation operational.
Makes Sure the Information Gathered Is Correct
Annual Compliances by the One-Person Business make sure the information gathered is truthful and accurate.
Avoids Harsh Penalties
Violations of the law frequently carry harsh fines and punishments. The severe fines can be avoided with proper yearly compliances.
Annual Compliances for One Person Company
Following are the annual compliances for One Person Company:
Holding the Board Meeting
According to Section 173 of the Companies Act of 2013, the Board of Directors must hold at least one meeting every six months, with a minimum of 90 days passing between meetings. As a result, a One Person Business should hold no less than two board meetings annually.
NOTE: If there is just one director on the board of an OPC, Sections 173 and 174 (Quorum of Meeting of Board of Directors) do not apply.
Penalty: The company will be assessed a fine of Rs. 25,000, and the officer will be assessed a fine of Rs. 5,000.
Election of an Auditor
The appointment of an auditor is required for One Person Companies under Section 139 of the Companies Act. It must have a Chartered Accountant company examine its financial records. The auditor will check the books of accounts and provide an audit report.
Note: OPC is not covered by the provision regarding the rotation of auditors.
Annual Return Filing
Every One Person Business is required to submit their annual return within 180 days of the fiscal year’s end. The specifics of the annual return must contain the following details:
- The shareholder/member of the business.
While submitting the annual return, the forms listed below must be included.
Every OPC must submit its Annual Return on Form MGT-7 within 180 days at the conclusion of the fiscal year.
The Business must also submit the Financial Statements, which cover the Company’s finances and comprise the following:
- Financial statement.
- Profit and Loss Account Statement.
- Director’s report.
Financial Statements Form AOC-4
Within 180 days at the end of the fiscal year, Every Person Business must file its balance sheet, together with a statement of profit and loss and director report.
Identification of Interest in Other Organisations
The OPC directors are required to report their ownership interests in other businesses on form MBP-1 at the first board meeting of each fiscal year. Infractions by the Director will result in a maximum one-year sentence of jail.
KYC of the Company’s Director
Every person who had a DIN as of the financial year’s 31st March was obliged to complete Form DIR-3-KYC for that financial year by the deadline of 30 September of the next fiscal year.
Filing of Form DPT-3 the Form DPT-3 must be filed annually on or before June 30 in order to report deposits and information that was not a deposit as of March 31.
Statutory Register Being Prepared
The statutory registers must be kept up to date by a One Person Corporation, in accordance with Section 88 of the Companies Act of 2013.
OPC is expected to adhere to a number of Event-based compliances as well.
- Share transfer.
- Director appointment or resignation.
- Nominees of bank signatories have changed.
- Auditor changes.
What Paperwork Is Needed For A One-Person Company To Comply Annually?
The following papers are necessary for Annual Compliances for One Person Company:
- Receipts for sales and purchases made during the year, as well as invoices for costs spent.
- Details of bank statements for all accounts held in the company’s name from 1 April to 31 March.
- Specifics of the submitted GST returns (If Any).
- Information about deposited TDS challans and submitted TDS returns (If any).
- P&L account and balance sheet.
- Financial records.
- Director reports.
- Specifics about the Member.
- Directors’ information.
How Can I Online File the Forms and Statements?
You may easily file all of the AOC4, MGT7, and ADT-1 forms online. Here are a few easy steps to help you get started.
- Visit the MCA website.
- Download the electronic form you want to submit.
- Complete the form in its entirety.
- Hit the “upload e-form” button.
- Upload the completed electronic form.
- You will be required to make a payment after uploading.
- Online fee payment.
In addition to the aforementioned compliances, an OPC, like any other business, is obliged by the Act to keep all necessary statutory compliances, such as the statutory registers, minutes book, and other secretarial documents.
Every OPC is required to abide by all conditions and guidelines established by the Companies Act of 2013. The Act’s regulations carry severe penalties and fines for violations. Thus, it is imperative that you are aware of the prerequisite compliances, as indicated above, to prevent your OPC from suffering such severe losses. To better grasp the compliances and submit them without fuss, get in touch with the experts at Corpbiz.