An increasing number of people in India have started taking their first steps into entrepreneurship, running their own business, and we have an increasing number of people seeking uncomplicated, non-laborious business structures.
To support this entrepreneurial spirit and limit the legal complications that come along with starting a business as a solo entrepreneur, the Indian government has created a business entity designed specifically for it – a One Person Company (OPC). One Person Company Registration allows an individual to run a private limited company and be in complete control with limited liability and corporate benefits.
What is a One Person Company?
A One Person Company (OPC) is defined as a type of company that has just one shareholder, one member. An OPC is a hybrid of a sole proprietorship and a private limited company, An OPC is owned and managed by one person but has its own legal identity, perpetual succession, and limited liability consequences.
OPCs were introduced by the Companies Act, 2013. Therefore, the OPC is ideal for solo founders that want to set up a business without going into partners or co-founders, but still want a formal company structure.
Characteristics of a One Person Company
Single Owner: An OPC can be created and operated by one person – the member is the only shareholder, the only director, and the only member with complete control.
Limited Liability: As an owner, you will have limited owner’s liability, your responsibility to the business is limited to the amount that was invested in the business, and there is no risk to your personal assets.
Separate Legal Entity: An OPC, like every company, has a separate legal identity from its shareholders. It can hold its own assets, enter into agreements, sue and be sued in its own name.
Perpetual Succession: The company will continue to exist, even upon the death or incapacity of the shareholder (as long as a nominee has been appointed).
No Minimum Paid-up Capital: There is no requirement for minimum paid-up capital to register a company.
Advantages of a One Person Company
1. Legal Recognition
OPCs, unlike sole-proprietorships, offer legal recognition and authorisation as an organised entity under corporate law, which increases credibility with banks, investors, and clients.
2. Limited Risk Exposure
If you are the business owner of an OPC, your personal liability exposure will only be your capital contribution to the OPC, meaning your assets are protected from your business risk.
3. Complete Control
As the business owner, you will have complete control of the business and be able to make and execute operational and management decisions faster in the business.
4. Easier Funding
Additionally, since OPC’s are an entity recognised by law and have defined structures, they will also find it easier to receive funding in the form of loans and investment from a licenced entity.
5. Better Compliance and Tax Benefits
In comparison with other business structures, OPC’s will have a number of tax benefits and fewer compliance regulations, especially with small businesses.
Requirements for OPC Registration
To register an OPC in India, the following conditions must be satisfied:
The person must be an Indian citizen and resident in India (residing in India at least 120 days in the financial year).
Only a single individual can act as a member/shareholder.
A nominee must be designated at the time of incorporation who would take over in the event of death or disability of the member.
The OPC cannot undertake non-banking financial services or invest in the securities of any corporate entity.
Documents Required for Registration
To begin the registration process, the following documents are required:
For the Applicant (Owner and Nominee):
PAN Card
Aadhaar Card or Passport/Voter ID/Driving License
Passport-size photographs
Email ID and Mobile Number
Proof of Address (electricity bill, telephone bill, bank statement)
For Registered Office:
Proof of address (Electricity or utility bill)
Rent agreement or ownership deed
No Objection Certificate (NOC) from the property owner
Step-by-Step Process for One Person Company Registration
Registering an OPC is a completely digital process through the Ministry of Corporate Affairs (MCA) website. Following is a step-by-step outline of the process:
Steps for Incorporation of One Person Companies (OPC)
Entrepreneurs starting a new venture can consider the following steps for incorporation:
Step 1: Get a Digital Signature Certificate (DSC)
An applicant needs to apply for a DSC to digitally sign documents.
Step 2: Apply for Director Identification Number (DIN)
The DIN is mandatory for the proposed director and can be applied for on the SPICe+ website.
Step 3: Approval for Name
Get a unique name and approval for reservation of a name using the RUN (Reserve Unique Name) on the MCA website.
Step 4: File the Incorporation documents
Once approval for the name is granted, the relevant documents need to be filed in the SPICe+ form along with attachments such as a memorandum of association (MOA), articles of association (AOA), and nominee details.
Step 5: Apply for PAN and TAN
The PAN and TAN will be applied for at the same time as the filing of the SPICe+ form.
Step 6: Issue of Certificate of Incorporation
Once the account is verified by the ROC, the company will be issued a Certificate of Incorporation.
When should you consider starting an OPC?
When you are a sole entrepreneur who has a business idea and would like to start an entity that has limited liability and the applicant is operating.
When you are a freelancer, but want to scale the scoring activity from a legal perspective.
Why you should choose Kanakkupillai for OPC Registration
Registering a one-person company requires reviewing documents, filing documents, and meeting deadlines, which could become overwhelming in the process. With Kanakkupillai, the entire journey will be more than manageable.
You get the following:
Total registration solutions
Professional drafting of MOA, AOA, and Nominee Paperwork
MCA filing + updates
Transparent pricing with no “hidden fees”
Ongoing compliance support
Kanakkupillai helps you start a business the right way, whether you are a freelancer or a visionary entrepreneur.
Conclusion
If you are a solo business owner looking to benefit from a corporate structure while still possessing full control over your company, a One Person Company Registration is perfect for you, as it presents limited liability attainable through a simplified structure. Simply put, it is the best of both worlds and a common preference for today’s entrepreneurs. With proper planning and the support of a trusted service like Kanakkupillai, you will find that registering an OPC will be an enjoyable and straightforward process.