ADVANTAGES OF OPC?
ADVANTAGES
Limited liability
The liability of the member of an OPC is limited to the extent of the share capital invested in the company. This means that the member’s personal assets are not liable to be used to pay off the debts of the company. This is a major advantage of OPCs, as it gives the member peace of mind knowing that their personal assets are protected in the event of the company’s insolvency.
Separate legal entity
An OPC is a separate legal entity distinct from its member. This means that the company can own assets, enter into contracts, and sue and be sued in its own name. This is another major advantage of OPCs, as it gives the company a lot of flexibility and allows it to operate independently of its member.
Single member
An OPC can have only one member. This means that the member has complete control over the company. This can be an advantage for entrepreneurs who want to have full control over their businesses.
No requirement of annual general meetings (AGMs)
An OPC is exempted from holding AGMs. However, the company must hold a meeting of its members at least once in every three years. This can save the company time and money, as it does not have to hold the AGMs that are required for other types of companies
Other benefits
OPCs are also eligible for various other benefits, such as lower tax rates and deductions on business expenses. For example, OPCs are taxed at a flat rate of 30%, which is lower than the tax rate for other types of companies. Additionally, OPCs are allowed to deduct certain business expenses from their taxable income, such as the cost of travel and entertainment.
Conclusion
OPCs have many advantages, such as limited liability, separate legal entity, single member, and no requirement of AGMs. These advantages make OPCs a good option for small businesses and entrepreneurs who want to start a business with limited liability and fewer compliance requirements.
Here are some additional advantages of OPC:
- Easy to set up and manage: OPCs are relatively easy to set up and manage. The process of incorporating an OPC is similar to the process of incorporating a private limited company. However, there are fewer compliance requirements for OPCs, which makes them easier to manage.
- Flexibility: OPCs offer a lot of flexibility. The member of an OPC has complete control over the company, and the company can operate independently of the member. This flexibility can be an advantage for entrepreneurs who want to have full control over their businesses.
- Cost-effectiveness: OPCs are a cost-effective way to start a business. The cost of incorporating an OPC is lower than the cost of incorporating a private limited company. Additionally, OPCs are taxed at a lower rate than other types of companies.
Overall, OPCs are a good option for small businesses and entrepreneurs who want to start a business with limited liability and fewer compliance requirements.
Here are some of the limitations of OPC:
- OPCs cannot raise money from the public.
- OPCs cannot be listed on a stock exchange.
- OPCs cannot carry out certain activities, such as banking and insurance.
