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One Person Company (OPC):

An overview

The best alternative to sole proprietorship concern, entrepreneur can retain their 100% ownership and be in the side of management as director however entrpeneur is required to add one more person as nominee who got literally no power till entrepreneur lossess ability to enter into a contract.

An overview

One Person Company Sole Proprietorship
Separate Legal Entity ie, company is viewed distinct from its owner
No separate legal entity ie, you and your business is identified as same
Your obligation is limited to asset of entity and personal assets remain untouched
There is no distinction between your business and personal obligation which means your personal asset would be used to settle your business obligation
Comparatively easy to obtain finance from bank / finance institution
Comparatively difficult to raise money from legitimate sources / third party
Taxed as corporate which enjoys lower tax bracket of 26.168% (including cess + surcharges)
to 30% plus cess + surcharge which in average turns out to be 35%

Why small-scale entrepreneur needs to choose OPC over private limited company:

Entrepreneur can act as both shareholder and director which enables him to have 100% say over the business.

And annual compliance cost of OPC is substantially less when compared to compliance cost to run private limited company.

Compliance requirement for OPC and private limited company is detailed below:

Compliance requirement One person company Private limited
Board meeting
If only single director is appointed then no need to hold board meeting but more than 1 director is appointed then minimum 1 board meeting in each of calendar year needs to be held
At least 4 board meeting should be held in a financial year and gap between two board meeting should not exceed 120 days.
Financial statement
Financial statement need not include cash flow statement
Financial statement must have cash flow statement
Annual general meeting(AGM)
Not compulsory to call for AGM
Compulsory to hold AGM within 6 months from end of FY

Big drawback of OPC

  • No perpetual succession – company will lose its identity once entrepreneur becomes incapable to run business.
  • No synergy – As number of shareholders cannot exceed 1, there is very less scope of synergy as Private Equity / Venture capitalist funding / mentorship is not available.
  • Suitable for small business - If an OPC crosses a turnover of over Rs 2 crores or has a paid-up capital more than Rs 50 lakhs. It must be converted into a private or public company.

Incorporate your OPC in 3 steps


Step 1

Obtain DSC for directors


Step 2

File single form called Simplified Proforma for Incorporating Company electronically (SPICe) which enable promotor to avail 3 difference services like; 1) Name reservation (upto two suggested name can be given) 2 ) Allotment of DIN (Director Identification Number) 3 ) Allotment of PAN & TAN


Step 3

prepare E-MOA & E-AOA and attach to SPICe form

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