Startup-One Person Company

Overview

Under the Companies Act 2013, a One Person Company (OPC) registration in India allows a single member who can also serve as the sole Director. This option is available to both residents and non-resident Indians, providing flexibility for individual entrepreneurs and business owners.

What is one-person company?

One Person Company in India is a new concept that has been introduced with the Company's Act 2013. A Person Company in India is incorporated by a single person. Before the enforcement of the Companies Act 2013 a single person was not able to establish a company. An OPC has the features of a Company and the benefits of a sole proprietorship. Earlier if a person had to establish a business then he or she could only opt for a sole proprietorship.

Benefits

Single Ownership: OPC allows quick decision-making and efficient business management without interference or suggestions from other owners, fostering a sense of ownership and motivation for growth.

Credit Rating: OPC's credit score doesn't affect loan applications, making it more accessible for businesses with varying credit profiles.

Income Tax Benefits: OPCs enjoy income tax deductions, with a standard tax rate of 30%, surcharges based on income, and taxation as a domestic company. The director’s salary is an allowed expense.

Interest & Remuneration: Interest and remuneration are considered taxable income, with a moderate tax burden. Repaid loans to directors are taxable.

Enterprises Development Act: Newly incorporated OPCs qualify as Micro, Small, or Medium Enterprises, entitling them to receive interest rates three times the bank rate for late payments.

Easy Funding: OPCs, if private limited, can raise funds from venture capital, angel investors, and financial institutions, transitioning into private companies.

Limited Liability: OPCs offer limited liability, safeguarding personal assets and encouraging risk-taking among entrepreneurs. Ideal for innovative startups.

Tax And Process

Taxation of OPCs: OPCs are taxed at a flat rate of 30% on net profits, with surcharge and cess applied as per regulations.

No Special Tax Concessions: OPCs do not qualify for special tax concessions or exemptions.

Compliance Requirements: OPCs must comply with yearly requirements, including filing income tax returns, and financial statements with the Income Tax Department and ROC.

Other applicable taxes: OPCs must comply with payment of other applicable taxes like GST.

Yearly Director Disclosures: Directors must make annual disclosures using Form DIR-8 and MBP-1.

Other Yearly Compliance: OPCs must also adhere to various other yearly compliance obligations, such as DIR-3 KYC, MSME-1, ADT-1, DPT-3, AOC-4, and MGT-7 A.

Documents Required

Director/Shareholder/Nominee Documents: Identity Proof: PAN Card, Aadhaar Card/Passport/Driving License/Voter ID, 3 Passport Size Photographs (each)

Address Proof: Recent Telephone, Electricity, or Bank Statement (in applicant's name, not older than 2 months)

Director Documents (All Directors): Consent to Act as Director (Form DIR-2), DIN Details, Declaration of DIN (If already allotted)

Shareholder Documents: Application for Digital Signature Certificate (DSC), Affidavit by Subscribers & Director (INC-9)

Nominee Shareholder Documents: Nominee Shareholder Details, Consent by Nominee Shareholder (Form INC-3), Company/LLP/Trademark Owner Documents (if applicable):

Board Resolution/Authorization for Name/Trademark Use, Authorization for Document Execution

Registered Office Address: No-Objection Letter from Address Owner, Address Proof in Owner's Name (Electricity, Telephone, Gas, or Water Bill), If using a Shared Office, additional documents like Lease Agreement and NOC letters are needed.

Procedure

Step 1: Request DSCs and DINs for each director

Step 2: Submit a request for a name reservation company incorporation

Step 3: Apply for PAN and TAN for your new business

Step 4: RoC issues an incorporation certificate with a PAN and TAN

Step 5: Open a bank account and start your business.

FAQ's