YOU NEED TO KNOW WHAT IS ONE PERSON COMPANY?
A One Person Company (OPC) is a type of business structure introduced in India to support entrepreneurs who wish to start and manage a business on their own. OPC allows a single individual to own and operate a company, providing a legal framework that combines elements of sole proprietorship and company structures. The concept of OPC was introduced under the Companies Act, 2013. Here are key features of a One Person Company: Visitofficialwebsite
PROCESS OF ONE PERSON COMPANY
Step 1: Apply for Digital Signature Certificate (DSC) –The first step is to obtain the Digital Signature Certificate (DSC) for the proposed director. To complete this, the following documents are required:
- Address proof
- Aadhaar card
- PAN card
- Photo
- Email ID
- Phone number
Step 2: Apply for Director Identification Number (DIN) – After obtaining the DSC, the next step is to apply for the Director Identification Number (DIN) of the proposed director. This is done through the SPICe+ form, which requires the director’s name and address proof. Note that Form DIR-3, which was previously used for DIN applications, is no longer required for new applicants. As of January 2018, DIN can be applied directly through the SPICe+ form for up to three directors.
Step 3: Apply for Name Approval—The next step in incorporating a One-Person Company (OPC) is selecting a company name. The name must be in the format “ABC (OPC) Private Limited.” The name approval process is part of the SPICe+ application. Only one name can be proposed, along with an explanation for choosing that name. You can apply for another name using the SPICe+ form if the name is rejected. Once the name is approved by the Ministry of Corporate Affairs (MCA), you can proceed with the next step.
Step 4: Prepare Required Documents – At this stage, you need to prepare the following documents to submit to the Registrar of Companies (ROC):
- Memorandum of Association (MoA): This document outlines the company’s objectives and the business it will engage in.
- Articles of Association (AoA): This document defines the internal rules and regulations for the company’s operation.
- Nominee Consent: Since there is only one director and member, a nominee must be appointed in case the director becomes incapacitated or passes away. The nominee must submit their consent in Form INC-3, along with their PAN card and Aadhaar card.
- Registered Office Proof: You must provide proof of the company’s registered office address, including ownership documents and a No Objection Certificate (NOC) from the property owner.
- Director’s Declarations: The proposed director must submit a declaration and consent in Form INC-9 and DIR-2, respectively.
- Professional Declaration: A declaration by a professional (such as a CA or CS) confirming that all legal compliances have been met.
Step 5: File Forms with MCA- Once all the required documents are prepared, they should be attached to the SPICe+ form, along with the SPICe-MOA and SPICe-AOA. These documents, along with the DSC of the director and professional, must be uploaded to the MCA portal for approval. The company’s PAN and TAN numbers will be generated automatically during the incorporation process, so there is no need to file separate applications for them.
Step 6: Obtain a Certificate of Incorporation – After the Registrar of Companies (ROC) verifies the submitted documents, they will issue the Certificate of Incorporation, marking the official formation of the company. Once received, you can begin business operations.
WHO IS ELIGABLE TO OPEN ONE PERSON COMPANY?
- A minimum and Maximum of One Director.
- A minimum and Maximum of One Member.
- Directors of a One Person Private Limited Company must be an Indian citizens and Indian residents.
- A nominee should be appointed before Incorporation
- Consent of the nominee should be obtained in Form INC-3.
- No Minimum Paid Up capital is Required.
WHAT ARE THE DOUCUMENT ARE REQUIRED TO OPEN ONE PERSON COMPANY?
The process of opening a One Person Company (OPC) in India involves the submission of various documents to the authorities. The required documents may vary based on the specific circumstances and the nature of the business. Here is a general list of documents typically required to open a One Person Company:
- Documents for the Proposed Director/Member:
- PAN Card: Copy of the Permanent Account Number (PAN) card of the proposed director/member.
- Address Proof: Any one of the following documents as address proof – Passport, Voter ID, Aadhar card, Driver’s License, or utility bills.
- Passport-sized Photograph: Recent passport-sized photograph of the proposed director/member.
2. Documents for the Nominee Director:
- PAN Card: Copy of the PAN card of the nominee director.
- Address Proof: Same as mentioned above for the nominee director.
- Passport-sized Photograph: Recent passport-sized photograph of the nominee director.
3. Registered Office Address Proof:
- Rental Agreement: If the office premises are on rent, a copy of the rental agreement along with the landlord’s consent and utility bill.
- Property Ownership Proof: If the premises are owned, documents such as property tax receipt, sale deed, etc., can be submitted.
HOW MANY DIRECTORS CAN ONE PERSON COMPANY HAVE?
A One Person Company (OPC) in India is designed for a single individual to operate as both the shareholder and the director. Therefore, an OPC can have only one director. The individual incorporating the OPC is the sole director and holds all the shares of the company.
While an OPC can have only one director, it may appoint a nominee director during the incorporation process. The nominee director is someone nominated by the sole member of the OPC who will take over the management of the OPC in case of the original director’s death or incapacity. The nominee director’s details are mentioned in the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC.
WHAT ARE THE BENEFITS OF ONE PERSON COMPANY?
One Person Company (OPC) is a business structure in India that provides several benefits, especially for individual entrepreneurs who want to establish a separate legal entity for their business. Here are some key benefits of a One Person Company:
- Limited Liability: One of the primary advantages is limited liability, which means the personal assets of the owner are protected in case of business debts or liabilities. The liability is limited to the extent of the capital invested in the company.
2. Separate Legal Entity: An OPC is a distinct legal entity, separate from its owner. This separation of legal identity enables the business to enter into contracts, acquire assets, and incur liabilities in its own name.
3. Single Ownership and Control: An OPC can be owned and controlled by a single individual, who acts as both the shareholder and the director. This simplifies decision-making and operational control.
4. Ease of Operation: OPCs enjoy more flexibility and operational ease compared to larger corporate structures. Compliance requirements are generally simpler, and the administrative burden is reduced.
5. Nominee Director: OPCs are required to appoint a nominee director. This individual steps in to manage the affairs of the OPC in case the original director is incapacitated or passes away. This ensures continuity of the business.
6. Creditworthiness and Credibility: Operating as an OPC can enhance the creditworthiness and credibility of the business. It is seen as a more formal and structured business entity, which can be beneficial when dealing with suppliers, customers, and financial institutions.
7. Perpetual Succession: The concept of perpetual succession means that the OPC continues to exist despite changes in the ownership or the death of the original owner. The nominee director ensures continuity.
8. No Minimum Capital Requirement: Unlike some other business structures, there is no mandatory minimum capital requirement for starting an OPC. The owner can start the business with any amount of capital deemed sufficient.
9. Tax Benefits: OPCs are eligible for various tax benefits and incentives available to small businesses. They are taxed at the same rates as private limited companies.
IS GST MANDATORY FOR OPEN PERSON COMPANY?
One-person company with a yearly turnover of more than Rs. 40 Lakhs (for goods) and Rs. 20 lakhs (for services) are required to
register for GST and pay taxes on their taxable goods and services
WHAT IS THE MINIMUM CAPITAL TO OPEN PERSONN COMPANY?
there is no specific minimum capital requirement to open a One Person Company (OPC) in India. The concept of OPC was introduced to support individual entrepreneurs and small businesses, and it allows flexibility in terms of the initial capitalization of the company.
The Companies Act, 2013, which governs the registration and functioning of companies in India, does not mandate a minimum authorized or paid-up capital for OPCs. Entrepreneurs can start an OPC with any amount of capital they consider sufficient for their business activities.
It’s important to note that while there is no minimum capital requirement, OPCs may still need to consider the capital they bring into the business for operational purposes. The capitalization of the company can depend on factors such as the nature of the business, its scale, and its financial requirements.
When incorporating an OPC, entrepreneurs need to specify the authorized capital and the paid-up capital in the Memorandum of Association (MOA) and Articles of Association (AOA). The authorized capital is the maximum amount of capital that the company is authorized to issue, while the paid-up capital is the amount of capital that the company has actually received from its shareholders.
WHAT ARE THE RULES TO OPEN PERSON COMPANY?
A One Person Company (OPC) in India is governed by the Companies Act, 2013, along with the relevant rules and regulations prescribed by the Ministry of Corporate Affairs (MCA). The rules and regulations provide the legal framework for the formation, operation, and dissolution of OPCs. Here are some key rules and requirements associated with OPCs:
- Formation and Incorporation:
- OPCs are formed and incorporated under the Companies Act, 2013.
- The process involves filing the necessary documents, including the Memorandum of Association (MOA) and Articles of Association (AOA), with the Registrar of Companies (RoC) through the online portal of the Ministry of Corporate Affairs (MCA).
2. Single Member and Director: An OPC must have a single member who is the owner and a single director who is also the shareholder. The same individual can hold both positions. A nominee director must be nominated by the sole member to take over in case of the original director’s death or incapacity.
3. Nominee Director: The sole member of the OPC is required to nominate a person as a nominee director in the MOA and AOA. The nominee director’s role becomes crucial in the event of the death or incapacity of the original director.
4. No Minimum Capital Requirement: There is no specific minimum capital requirement for OPCs. The owner can start the business with any amount of capital deemed sufficient.
5. Perpetual Succession: The concept of perpetual succession applies to OPCs, meaning the company continues to exist despite changes in ownership or the death of the original owner. The nominee director ensures continuity.
6. Audit Requirements: OPCs with a turnover exceeding the prescribed limit or having a paid-up capital above a specified threshold are required to undergo a mandatory audit.
WHAT IS THE ITR FORM FOR OPEN PERSON COMPANY?
The Income Tax Return (ITR) form that a One Person Company (OPC) needs to use for filing its income tax return depends on various factors, including the nature of income, the total income earned, and the structure of the company. As of my last knowledge update in January 2022, the specific ITR form may vary from year to year, and it’s crucial to refer to the latest guidelines issued by the Income Tax Department. As of my last update, the common ITR forms for companies included ITR-6.
Here are some key points to consider regarding ITR filing for an OPC:
1. ITR-6: Generally, companies, including OPCs, are required to use ITR-6 for filing their income tax returns. ITR-6 is the form applicable to companies other than those claiming exemption under section 11 (income from property held for charitable or religious purposes).
2. Presumptive Taxation Scheme: If the OPC opts for the presumptive taxation scheme under Section 44AD, it may use the relevant ITR form (e.g., ITR-4). The presumptive taxation scheme is applicable to eligible businesses with a turnover up to a specified limit.
3. Audit Requirement:If the OPC is required to undergo a tax audit under the Income Tax Act, it needs to file the return using the applicable ITR form for auditable cases (e.g., ITR-6).
4. Resident or Non-Resident:The residential status of the OPC may also impact the choice of ITR form. For example, if the OPC is a non-resident, it may need to use a different ITR form.
CONCLUSION
The conclusion for an One Person Company (OPC) typically summarizes the key points about this unique form of business entity. Here’s a sample conclusion:
“In conclusion, the concept of One Person Company (OPC) represents a significant milestone in the realm of business incorporation, particularly aimed at encouraging entrepreneurship and facilitating ease of doing business. Through its innovative structure, OPC provides a single individual with the opportunity to establish and operate a corporate entity with limited liability, thereby mitigating personal risk while fostering business growth. With its simplified compliance requirements, reduced administrative burden, and distinct legal identity, OPCs offer a viable alternative for solo entrepreneurs to formalize their ventures. As a result, OPCs have emerged as a popular choice, particularly among small business owners, freelancers, and professionals seeking to establish a corporate presence with minimal regulatory complexity. However, it is imperative for OPC proprietors to adhere diligently to regulatory obligations and corporate governance norms to ensure sustained compliance and credibility in the business ecosystem. Overall, OPCs represent a dynamic and adaptable business structure that empowers individuals to pursue their entrepreneurial aspirations while enjoying the benefits of limited liability and corporate legitimacy.” Visitofficialwebsite
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