Resources for Small Business

The A-to-Z of One Person Company Registration in India

Starting a business of your own can be extremely exciting, but creative freedom and the joy of being your own boss comes with a bunch of challenges. It all begins with intimidating government paperwork, needed in order to register your business and make things official.

In this article we take a look at how you can register a ‘One Person Company (OPC) Private Limited’ in India – a legal registration option introduced by the government in the revised Companies Act of 2013, with the objective of making it easier for start-ups to register their brands.

What exactly is the OPC?

Before this act was passed in 2013, at least two directors and shareholders were required to register a company. This meant, that if you wanted to start something by yourself, you simply didn’t have a choice but to find a partner. The OPC registration has changed this, making it possible for even a single person to register his or her business. As the name suggests, the company gets registered to one person, who is the sole shareholder and director of the company.

Do I qualify for the OPC registration?

If you run a business all by yourself, and have no other partners or shareholders, then you are eligible to register your organization as a One Person Company; as long as you are a permanent resident of India and an Indian citizen. So, if you are a fashion designer who wants to launch a line of clothing or a chef who wants to start a catering business, this is perhaps the best option for you.

Is registering an OPC worth the effort?

Upcoming entrepreneurs can greatly benefit from registering their business as a One Person Company Private Limited. Here’s how:

Get a legal stamp of recognition – Having a legally registered company increases the legitimacy of your brand. Customers, clients, suppliers and investors will find it easier to trust your work – and we all know how important that it, especially when setting up!

Separate your personal and business assets – Let’s face it, starting something of your own comes with the risk of failure; expect the best, but prepare for the worst. Under the liability protection clause, any financial loss or debt your business faces will not need to be cleared against your personal assets.

Be your own boss – Having many directors and shareholders comes with the added hassle of dealing with other’s demands, dislikes, schedules and egos. If you are the sort that likes to work alone and maintain complete control over all business decisions, then the OPC registration is ideal for you. You can add more people to the board of directors at a later date if you feel the need to do so.

Say goodbye to tiresome protocol  – An OPC is exempt from protocol that is usually enforced on other registered companies. For example: You aren’t required to have annual or general body meetings & you can sign annual returns yourself, since you are the only decision maker.

Get more bang for your buck – It is much easier for OPCs to get loans, compared to individuals or proprietary firms. Besides, there are also several tax benefits in having a registered OPC – the director’s (your own) salary, rent for the space you use, the funds you personally invest in the business and several other expenses are deducted before paying tax. So in effect you pay income tax on a much smaller amount.

Besides, the OPC registration is ideal for those who wish to test their business model, and perhaps expand later on. With an OPC you can even begin to approach angel investors or venture capitalists. Once the company grows and becomes successful, you can convert it to a multi shareholder private limited company. So to answer that question, it certainly is worth the effort.

How is the OPC different from other types of registrations?

Spot the differences! Here’s a handy table to help you compare the different types of registrations for your business.

One Person Company (OPC) Limited Liability Partnership (LLP) Sole Proprietorship Private Limited Company
Human capital needed at time of registration Just a single director and shareholder is needed to start an OPC. At a later date up to 15 directors may be added. A minimum of two directors are needed in order to register an LLP. As the name suggests a single person can register as sole proprietor of a company. A minimum of 2 directors and 2 shareholders are needed in order to register a private limited company.
Ownership The business is regarded as a separate entity owned by one person. The business is regarded are a separate entity, but has several different owners. The business and owner are viewed as a single entity in the eyes of the law. The business is considered to be a separate entity, the affairs of which are governed by several directors.
Monetary capital needed at time of registration A minimum capital of Rs.1,00,000 is needed to start an OPC. No financial assets need to be declared in order to register an LLP. No financial assets need to be declared in order to register a Sole Proprietorship. A minimum capital of Rs.1,00,000 is needed to register a Pvt. Ltd. Company.
Compliances No board meeting or AGMs are needed if there is a single director. If the company has 2 or more directors, bi annual meetings are mandatory. There are no compulsory compliances. There are no compulsory compliances. At least 1 board meeting every quarter and 1 AGM (Annual General Meeting) every 6 months for closing of accounts are mandatory.
Liability protection A limited liability clause protects the owner’s assets. (Owner is not liable to clear business debts against his/her personal finances.) As the name suggests a limited liability clause which protects the owners’ assets. Unlimited liability clause makes the owner accountable for any loss or debt suffered by the business, since they are both deemed one entity in the eyes of the law. A limited liability clause protects the owner’s assets.

How should I go about registering an OPC?

Unlike a lot of other government paperwork, registration of an OPC is quite easy! To really make it simple to understand, we’ve broken down the process into a series of steps:

Step 1: Apply for a Director Identification Number (DIN), and a Digital Signature Certificate (DSC).

Step 2: Register the name of your company.

Step 3: Select a nominee (who will become the owner of the company in case of your passing) & fill a nominee consent form.

Step 4: File all the above papers, and submit them to the Ministry of Corporate Affairs.

Step 5: Wait to receive your Final Incorporation Certificate and begin work at a One Person Company.

All the above forms and instructions are available online at www.mca.gov.in.

This recently introduced legal registration option indicates that the government recognizes a surge in entrepreneurship and is willing to support new business ideas! So dare to dream, and give your ideas wings by starting a One Person Company.


Are you a brand that is looking to register as an OPC? How about taking your business online, and selling your products to your customers through your own website? Start your own eCommerce store in the next 5 minutes with Zepo!

 
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Salonee Gadgil

Salonee Gadgil

Salonee’s prowess as a writer is displayed in her versatile portfolio. She has an adaptive style which lends itself well to a variety of different communication applications – from corporate branding to editorial essays. Besides writing for various online and print media, Salonee works as a photographer and tutors middle-schoolers. She is passionate about travel, food, fitness and dance. You can check out her work on her blog.

  • prateek

    can you name some of the one person companies in india

    • Hi Prateek,

      There is no register or list of OPC’s in India. Unfortunately, we can’t help you there.

  • Registeropc

    OPC will give the young businessman all benefits of a private limited company which categorically means they will have access to credits, bank loans, limited liability, legal protection fo.r business, access to market etc all in the name of a separate legal entity. Get more information in this site http://www.dobizindia.com/one-person-company/.

    • Thanks for the information.

  • Hi Ankit,

    There are no legal formalities required to open and eCommerce website in India. You can start a website as an individual and get access to a payment gateway and logistics services as well!
    You will need to register the business only if your annual turnover crosses 5L per annum.
    – Team Zepo.

  • Hi Saurabh,

    So an OPC company will have the following types. So depending on what type of OPC you have, the suffix will change accordingly.
    1.OPC Limited by Shares.
    2.OPC limited by Gaurantee and having share capital
    3.OPC limited by Guarantee and having no share capital
    4.OPC unlimited having share capital
    5.OPC unlimited not having share capital

    The details of these is not our expertise. But you can get in touch with team member of valiksearch.com and they will be able to help you about the same.

  • Hi Vasu,

    Thanks for writing in. But we must admit, that we don’t have much expertise in the area. And hence would suggest you to ask the same on other forums.

    Do let us know if we can be of any more help.

  • Jinesh Mehta

    Hello Sir,
    I am Practicing Chartered accountant. you can contact me @ cajineshmehta@gmail.com for your queries. We are start up advisors & certainly like to advise you. Thanks.

    • Hi Jinesh,

      Thanks for dropping in your details. We are sure a lot of readers would need help setting up their businesses.

  • Hi Utsav,

    Apologies for a late reply. These are taxation queries that would be best answered by a lawyer or a CA who are experts in the matter. We suggest you get in touch with one to know more.

  • Hi Sameer,

    We don’t have enough information or knowledge to answer your question judiciously. Apologies for this. Opening up your question for other readers here to answer.

  • Hi Jack,

    In India, you can go through the procedure for any type of company registration all by yourself. However, there are two main reasons why it is recommended for you to take the assistance of a CA.

    First, for registering an OPC, you might need detailed knowledge of the procedures and formalities involved. Hiring a CA can help you save a lot of time and effort on that front.

    Secondly, a good CA can help speed up the entire registration process by ensuring constant follow-ups and making sure that your documents don’t get entangled in the red tape.

    If you feel you can take care of the two issues mentioned above by yourself, then you can go ahead and register your company as an OPC on your own.

  • Hi Subba,

    We don’t have much knowledge about converting from one business registration to the other. However, you can convert an OPC to a Pvt. Ltd. company. All you are required to do is fill up form INC-6 to convert from an OPC to a private or public company. You can download the form along with the instructions here: http://www.mca.gov.in/MCA21/dca_html/downloadeforms/Download_eForm_choose.html

  • Hey,

    Yes, the income tax for the company. Your individual taxes will have to be filed separately.

    Cheers!

  • Hi there,

    Yes, it is possible to do so. You are required to fill up form INC-6 to convert from an OPC to a private or public company. You can download the form along with the instructions here: http://www.mca.gov.in/MCA21/dca_html/downloadeforms/Download_eForm_choose.html

  • Hi Divyendu,

    Sorry this took rather long. We were trying to find the right answers.

    As an OPC, there are not many repetitive things to be done as the single director. You are required to file your income every year, but do not need a company secretary to sign it for you. Other things like the Annual General Body meetings are also not required, as you are the single director.