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Simple Guide to One Person Company (OPC)

What is an OPC?

A One Person Company (OPC) is a business structure where a single person owns and manages the company. It offers the benefits of a private limited company with fewer legal requirements.

Key Features

  • Single Owner: Only one person can own the company.
  • Limited Liability: The owner is only responsible for the money invested.
  • Separate Legal Identity: The company is different from its owner.
  • Nominee Required: A nominee must be appointed in case something happens to the owner.
  • Less Compliance: Fewer rules compared to other company types.

Who Can Start an OPC?

  • Only Indian citizens who are residents in India can start an OPC.
  • A person cannot own more than one OPC.
  • The nominee should also be an Indian resident.

Steps to Register an OPC

Step 1: Get a Digital Signature (DSC)

  • Required for online document filing.
  • Needs PAN, Aadhaar, email, and phone.

Step 2: Get Director Identification Number (DIN)

  • Apply online through the MCA (Ministry of Corporate Affairs) website.

Step 3: Choose a Unique Name

  • Check name availability and apply online.

Step 4: File Incorporation Documents

  • Submit necessary documents:
    • Memorandum of Association (MoA)
    • Articles of Association (AoA)
    • Owner’s PAN and Aadhaar
    • Proof of registered office

Step 5: Get Certificate of Incorporation

  • After approval, the MCA issues the certificate along with PAN and TAN.

Taxes and Compliance

  • Tax Rate: 25% on company profits.
  • GST Registration: Needed if turnover is over ₹20 lakh (₹10 lakh in some states).
  • Annual Filings:
    • Financial reports (AOC-4, MGT-7A)
    • Audit if turnover exceeds ₹2 crore.

Benefits of OPC

  • Limited liability protection.
  • More credibility for loans and investments.
  • Easy decision-making with a single owner.
  • No outside interference.

Drawbacks of OPC.

  • Cannot raise money from investors.
  • Must convert to a private company if turnover exceeds ₹2 crore or capital crosses ₹50 lakh.
  • More costs than a sole proprietorship.

Converting OPC to Private Company

If turnover or capital crosses the limit, conversion is mandatory. File necessary forms and pass a board resolution to complete the process.

Can an OPC have multiple directors?

No, an OPC can have only one shareholder, but it can appoint more than one director.

Can an OPC be converted into a private limited company?

Yes, if its turnover exceeds ₹2 crore or paid-up capital crosses ₹50 lakh, conversion is mandatory.

Is GST registration mandatory for an OPC?

Only if the annual turnover exceeds ₹20 lakh (₹10 lakh in special category states).

What is the tax rate for an OPC?

An OPC is taxed at a flat rate of 25% on profits.

Can an OPC raise funds from investors?

No, an OPC cannot raise funds from investors as it has only one shareholder.

Who can be a nominee in an OPC?

The nominee must be an Indian citizen and resident.
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