| Table Of Contents: |
|---|
| 1. Basic Funda of OPC 2. Sole Proprietorship Firm (vs) One Person Company 3. Benefits of Start-up OPC 4. Taxability of OPC 5. OPC Registration Process 6. Govt Fees 7. Documents required for OPC Registration 8. MCA Services covered in SPICE+ Web Form 9. Other common FAQ |
1. basic Funda of OPC
- Only one member (shareholder)
- Minimum one director
- Gives corporate image
- Separate legal entity as the company is different & the owner is different
- Limited liability (discussed in detail in the next topic)
- Easy to form & manage OPC
- Better than a sole proprietorship firm, partnership firm & LLP
- Fewer compliances comparing to a private limited company
- Low Govt fees to register OPC (discussed later)
- Need not convert into private or public limited company upto certain limits of capital & turnover as discussed later
- Minimum two board meetings in a year. Whereas for other companies it’s four.
2. Sole proprietorship firm vs One Person Company (OPC)
- One Person Company: It is a kind of private ltd company but with only one shareholder who wishes to have a corporate look. In simple terms, it can be called as One Person Startup (or) One Man Company.
- Sole Proprietorship Firm: The sole proprietorship firm is not a separate legal entity. It can be referred to a business solely owned by one person. Such a person is personally liable for the expenses & debts of the business. They are simple to form & have nominal compliances than other ownership. However, Sole proprietorship is risky because proprietor’s liability is not restricted to the extent of capital invested in the business but to the extent of his personal assets. Whereas, in the case of OPC the liability of the owner is restricted to the extent of capital invested & will not costs his personal assets to fulfil the liabilities of the company.
- Pro Tip: The sole proprietorship firm is not legal preferable to make your business grow by inviting various customers including corporates, government as they look at the authenticity of business which matters a lot to them.
3. benefits of startup OPC
It is important to note that the criteria of being startup changes from purpose to purpose & scheme to scheme. Hence users shall consider accordingly. Few of the benefits illustrated as below:
A. Legal Benefits
- Limited liability
- Less annual compliances compared to others
- Can list as a seller on Government – Marketplace (GeM)
- Close the company within 90 days
B. IPR & Financial Benefits
1. Fast track startup patent application
2. 80% rebate – Filing a patent application
3. 50% rebate – Filing trademarks application
4. Government support in bearing facilitation cost
5. SIDBI equity funding support for innovation-driven entities.
C. Taxation Benefits
- Tax holiday for first 3 years under #startupindia to facilitate business growth & cater working capital requirements in the initial stages.
- Relaxation on angel investment tax & foreign venture capital tax.
- High depreciation benefit.
4. taxability of OPC
In the hands of Company: The tax rate of OPC is at the rate of Flat 30% + Cess 4%. Also, the distribution of profits to shareholder requires deduction of TDS by the OPC at the rate of Flat 10%. It is to be noted that, with effect from FY 2020-21, the concept of Dividend Distribution Tax (DDT) is omitted & hence not applicable.
In the hands of Shareholder: The above said distributed profits are again taxable in the hands of the shareholder as per the slab rates of an individual.
The two-layered taxation is because of separate legal entity status as the company is different & the shareholder is different. This concept holds good for the public or private limited company including OPC even if there is only one shareholder/owner.
In the hands of Sole Proprietor: The entire profits are taxable in the hand of the proprietor at slab rates of an individual. There is no two-layered taxation, unlike the company. However, it suffers its own disadvantages as discussed earlier.
It is to be noted that the company shall deduct TDS while making any payment. Click here to access all the TDS rates.
5. OPC Registration Process
- Step:1 Obtain Digital Signature Certificate (DSC)
- Step:2 Reservation of Name of Company
- Step:3 Application of DIN Number
- Step:4 Drafting Memorandum of Association (MOA), Articles of Association (AOA)
- Step:5 Apply for Company Registration
- Step:6 Allotment of DIN, CIN, PAN, TAN, PF, ESI, GST, Professional Tax(Maharastra)
It is to be noted that, INC-9 as a declaration of first subscribers, first directors will be automatically generated & made available for download for signature.
Pro Tip: One can apply for company registration without reserving a name in a single go. However, it is advisable to reserve the name first & get it approved. Then go with the process to save time & efforts in case of failure to get the requested name.
6. Government fees on registering OPC
The Govt fee for registering One Person Company is as below:
1. Digital Signature Certificate of every Director: It may vary from dealer to dealer but may cost upto Rs. 1,500.
2. Name Approval: The unique name shall be reserved & it costs Rs. 1,000.
3. SPICE+ Form:
Capital Introduced Up-to Rs.15 Lakh – Free
More than Rs.15 Lakh – Rs.2000+ Rs.200 for every increase in capital of Rs.10,000 or part thereof.
4. MOA & AOA: The stamp duty varies as per their respective state laws which may cost up to Rs. 5000.
5. PAN & TAN: It costs Rs.131 (Rs. 66 & Rs. 65)
However, if the application demands re-submission due to rejection or not, the prices may vary. Hence users shall consider accordingly.
7. documents required for OPC Registration
| Nature | Particulars |
|---|---|
| Director(s) | 1. Proof of Identity: Voter ID, Passport, Driving License 2. Proof of Address: Bank Statement, Electricity Bill, Telephone Bill, Mobile Bill 3. Consent to act as Director (DIR-2) 4. Approval cum Declaration of the Authorised Signatory for GST registration including a passport size photograph 5. Specimen Signature Card for Provident Fund Registration 6. Autogenerated INC-9 – Declaration of first subscribers/ first directors needs to be signed. |
| Nominee | 1. Proof of Identity: Voter ID, Passport, Driving License 2. Proof of Address: Bank Statement, Electricity Bill, Telephone Bill, Mobile Bill 3. INC-3: Consent to act as Nominee for Shareholder – To be physically signed. Enclosures: PAN, Aadhaar, Proof of Address |
| Company | 1. Rental Agreement & No Objection Certificate from the Owner. 2. Proof of Registered Office Address: Copies of Utility Bills not older than 3 months – The electricity bill, Telephone Bill, etc. to be submitted to substantiate the above. |
8. MCA Services covered in SPICE+ Web Form
- Company Formation
- DIN Allotment for Director(s)
- PAN
- TAN
- Provident Fund Registration
- ESI Registration
- Profession Tax Registration (Maharashtra)
- Opening of Bank Account for the Company and
- GST Registration
8. Common FAQ’s
Ans. Yes, the reason for introducing the concept of One Person Company (OPC) is to promote an individual who wish to have a business on his own with a corporate image.
Ans.
1. Director – Min one & Max fifteen.
2. Shareholder – Only one.
3. Nominee – At least one.
4. Shareholder & Nominee – Should be Indian Resident.
5. Authorised Capital & Paid-up Capital
6. Digital Signature Certificate (DSC) for each director(s).
7. DIN Number for each director.
Ans. Certificate of Incorporation is the proof for existence of company.
Ans. At the time of incorporation itself, nominee details will be registered. At the event of death, the ownership shall be transferred to such registered nominee. In such a case, one shall file INC-4 with the ROC to provide details of new member (nominee).
Ans. Only a natural person who is Indian citizen & resident of India (stayed > 181 days in India) can be a director of the company.
Ans. As per the company rules & regulations, a person can be a shareholder in only one OPC but can be a director in any other private limited companies or can be a partner in any LLP.
Ans. He shall withdraw his membership in any one of OPC within 180 days.
Ans. The form INC-4 shall be filed to change the nominee.
Ans. Yes as there are no restrictions to invest in another company but can be a member of only one OPC.
Ans. Once the application is submitted it may take 20 to 30 days.
Ans. It’s a kind of a pen drive with your signature in a digital form with password protection. It is mandatory to sign all the applications made by the director(s) and shareholder(s) digitally.
Ans. MOA and AOA are charter documents. It includes the business objectives, policies, rules & regulations of the company. These are drafted by our professionals and will be delivered to you along with Certificate of Incorporation.
Ans. OPC has to mandatorily convert itself into a private limited or public limited company by filing form INC-5 with ROC within six days in the following cases:
a. Paid up share capital exceeds Rs. 50 Lakhs (or)
b. Average annual turnover of prior three consecutive financial years exceeds Rs. 2 Crores.
Ans. LPC Services, An Online CA at your Fingertips, offers all services including OPC registration online irrespective of the place you live. All you need is information & documents ready in your hand & internet connection on your device and your job is done.
Ans. You don’t need to be physically present at any government office. LPC Services will take care of it. All you need is information & documents ready in your hand & internet connection on your device and your job is done.
Our Support
We will guide you through the whole process of OPC registration at affordable prices. Also, the company is supposed to maintain active annual compliances in future. LPC Services supports you to fulfil your requirements at very reasonable prices. Book your Free Consultation Now.