One Person Company is a new type of business entity that allows a single entrepreneur to operate a corporate entity with limited liability protection. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP). Similar to a Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.
Advantages of One Person Company
1. A Separate legal entity
OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.
2.Easy Funding
It is a company is a private company, OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.
3.More opportunities, Limited liability
One of the advantages of One Person Company is that it has more opportunities, limited liability since the liability of the OPC is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative start-ups.
4.Minimum Requirements:
- Minimum 1 Shareholder
- Minimum 1 Director
- The director and shareholder can be the same person
- Minimum 1 Nominee
- Letters 'OPC' to be suffixed with the name of OPCs to distinguish it from other companies
OPC have to face little compliance burden as compared to private limited companies, hence OPC can more focus on other functional and core areas.
5. Benefits of being a Small Scale Industries (SSI)
An OPC can avail the various benefits provided to Small Scale Industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.
6. Single Owner
You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.
7. Benefits under Income Tax Law
Any remuneration paid to the director will be allowed as deduction as per income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.
8. Receive interest on any late Payment
OPC avails all the benefits under Enterprises Development Act, 2006. The newly start-up OPC is micro, small, or medium, hence they are covered under this act. As per the Act, if buyer or receiver receives any late payment (receives payment after a specified period), then he is entitled to receive interest which is three times the bank rate.
9. Increased Trust and prestige
Any business entity that runs in the form of the company always enjoys an increased trust and prestige.