One Person Company (OPC) is the right structure to start a company if there is only one promoter/entrepreneur. As per Section 2(62), OPC is a company which has only one individual along with one nominee.
OPC is a great vehicle to promote self-employment as it requires only one Founder. However, the company’s Memorandum of Association mentions the name of the nominee, who in the event of death or disability of the promoter shall assume his position.
The One Person Company (OPC) combines most of the benefits of a sole proprietorship and a company form of business. The solitary promoter will act in the capacity of a main executive as well as a shareholder or investor. The individual has full control over the organization without the need for finding the right kind of co-partner/s for starting a business or offering employee stock opportunities. Moreover, the OPC’s legal and financial liability is limited to the company and not the member.
OPC is formed as a ‘Private Limited Company’ with a minimum paid up capital of Rs. 1, 00,000. It can be formed as company limited by share capital or limited by guarantee or unlimited company.
The registered office of an OPC need not necessarily be a business space. You can establish your office at your home or residential place too. However, you require the following documents for its registration:
An OPC does not face the risks and uncertainty of a sole proprietorship business. As the liability of the owner in the case of OPC is separate from the company, the owner does not face the threat of lien on personal property in case of defaulting on his liabilities. His personal property is safe, irrespective of the debts of the business.
Sole Proprietorship comes to an end with the death of the proprietor. However, an OPC has a different legitimate identity whereas in case of sole proprietorship, there is no distinction between the promoter and the company.
Another important difference is that the OPC is taxed separately, as opposed to a sole proprietorship where tax is paid at individual rate.
The accounts of OPC are regularly audited, imparting it greater trustworthiness among merchants and loaning institutions.
114, 4th Floor, Hari Nagar Ashram
Mathura Road, New Delhi- 110014