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Paras Mehra

CA Paras Mehra is a thinker, writer, reader and speaker. He is also professionally associated with, a brand for trademark registration and other related services.

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Why You Should Register Your Business as One Person Company (OPC)

One Person Company was introduced in the year 2013 and it is by nature is a private limited company.

I often encountered with a question that many single founders ask that whether they can register a private limited company? Because, through one person Company (OPC) is already there but due to non-awareness, people are still wondering about this type of company.

Today, we would like to tell you that if you are a single owner and want to establish the business, then you can choose One Person Company (OPC) as your form of business.

Here are the ten points describing as to why you should register One Person Company (OPC) as your form of business.

#Point No.1 – Body Corporate:
One Person Company was introduced in the year 2013 and it is by nature is a private limited company. Further, it is a body corporate, that means it has a separate legal existence and therefore, in the event of any legal case, it is the company that will be liable and not you personally.

E.g. Mr.A got injured by using your product, now he can sue your company and demand a claim, but he cannot sue you personally because you are working under a company which is a separate legal entity.

#Point No.2 – No Minimum Capital: Through it was abolished in the year 2014 but people still are not aware of it. Kindly note, to register a One Person Company (OPC), you don’t need a minimum capital amount. You can choose as per your capacity.

E.g. If you want to start a company with Rs.5000, then you are allowed to do it so.

#Point No.3 – No High Cost for Compliances: This is the strongest myth that people are aware of. First of all, OPC Company is the freest company than any other type.

Further, compliances under OPC are not to be afraid off, because it may cost you 8 to 10k yearly on compliances but it help you prepare a proper legal file which can be of immense use e.g. to apply for a loan, credit card, CC limit, applying for tender etc.

#Point No.4 – Easy funding: Most people are not aware of that loan funding is based on your cibil score and if you have a bad cibil score then it is difficult to get the loan. However, if you have incorporated a company, then your cibil score is off no value because then OPC cibil score will be checked and hence, you can avail loan funding even when your cibil score does not allow you to.

#Point No.5 – Easy hiring: Do you know the most difficult part of establishing a startup is to build a good team and as per research it is found that it is easier to hire people in a private company than under proprietorship.

A proprietorship is not a registered form of business and therefore has no legal existence. Hence, form a company and build a team.

#Point No.6 – Easy conversion into Private Limited Company:
Also, it is not that once OPC is established, it can’t be converted into a private limited company.

As per law, you can easily convert the OPC into a private company by just filing a single form. However, at least 2 years must have been passed.

#Point No.7 – Minimum requirements to register OPC: Further, it is very easy to register a one-person company in India. You just need to fulfill the following requirements:

- One founder and one nominee are required. The nominee is the person who shall take over the company in the event of the death of the sole owner.
- PAN card, Aadhaar card, and bank statement are required for both owner and nominee.
- Electricity bill and NOC is required for the place where the company is to be registered.
- The total fees for OPC registration with are only Rs.11,000 (all inclusive) and your company can be formed in 5 to 8 days depending upon how much fast you provide us with the document.

#Point No.8 – Mandatory Conversion to Private Limited Company: Yes, once you reach a turnover of Rs.2 crore and increasing the capital to Rs.50 lakh the One Person Company (OPC) is mandatory to be converted to a Private Limited Company by filing a single form.

#Point No.9 – Benefit of being an MSME: Through, anyone can register under MSME in India, however, if you register yourself as a private limited company, then it certainly reaps you benefit in the form of easy loan funding.

Why are MSME given easy loan funding at a cheaper rate of interest?

There are certain priority sectors to which bank have to lend money at the cheaper rate of interest. These are decided by the Reserve Bank of India (RBI). Micro Small and Medium Enterprises (MSME) are one of the priority sectors which are awarded loan funding.

#Point No.10 – International Recognition: People who are involved in export business knows that how much it is difficult to establish the export business because the person outside India doesn't trust easily.

Therefore, One person Company (OPC) is a private limited company by nature and its details are available in the government domain, therefore becomes easier to establish trust internationally.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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