It is easy to start a company now, moonlighting and gig work becomes easier to manage!
The Indian Government has made it possible for you to start a company without having to find a Partner/co-founder. This is amazing, because lets face it, finding a co-founder is one of the hardest things you can do and in many cases it is the main reason that people are hesitant to start-up. As moonlighting/gig work gets more traction, registering and learning to manage a One Person Company (OPC) becomes even more important.
What is a One Person Company (OPC)?
The Govt. of India (GoI) defines a One Person Company as an entity that has only one person/shareholder in it. This makes it significantly easy to create and manage a company especially for someone who is new to creating and managing a business.
Key features of an OPC
|– Private company|
– One Director
|– Single member|
– No minimum paid-up share capital
|– Single nominee|
– No succession (In the event of death, the nominee takes over)
When do I need to register a one person company?
If you are looking to start a small business or moonlight or do gig-work in any format, it is advisable to start an OPC (Please speak to a lawyer/Chartered Accountant to identify the best option for your specific case). Setting up an OPC is a much more professional way to engage customers, pay taxes and leverage protections provided by the laws of the land.
An OPC is best for those who would like to retain full control over all business operations while enjoying limited liability and the benefits of having a corporate structure.
Differences between an OPC, sole proprietorship, and a company?
|One Person Company (OPC)||Sole Proprietorship||Company|
|– One Director, registered||– Single member, unregistered||– Minimum two Directors, registered|
|– Liabilities are restricted to the OPC||– Liabilities are associated to the member in a personal capacity`||– Liabilities are restricted to the company|
|– Compliance is less than that of a company||– Easy to setup, less compliance||– Compliance needs are high|
|– Financial statements need to be audited and submitted to ROC||– Financial statements as part of IT returns||– Financial statements need to be audited and submitted to ROC|
|– Easy to raise funding||– Hard to get/raise funding||– Comparatively easier to raise funding|
|– Taxed as a Private Company||– Taxed as an individual||– Taxed as a Private Company|
Liabilities – this is the most important difference between solepropreitorship and an OPC. In the case of sole proprietorship, liabilities are the personal obligation of the promoter, whereas in an OPC they are restricted to the company. Simply put, an OPC protects its member from being held personally accountable for the liabilities that it owes.
Where can I register an OPC or who do I contact?
There are a couple of ways in which you can register an OPC. The easiest being to register an OPC by creating it yourself on the Ministry of Corporate Affairs website https://www.mca.gov.in/. As a first step you will have to create a Directors Identification Number (DIN) and obtain a Digital Signature Certificate (DSC) to be able to create an OPC entity. Another option is to work with your Chartered Account or a personal lawyer to get the work done.
The easiest option though would be to work with online companies like www.startupwala.com or www.indiafilings.com. Once you sign up with them, they help you create a corporate entity and also offer legal and audit support to meet your regulatory needs. Some companies are even known to offer additional perks like GST registration, domain hosting, email accounts, etc for free, as part of the incorporation process.
What are the charges associated with starting an OPC?
The minimum charge to start an OPC in India is INR 7000. If you choose to work with a company like startupwala.com then they are known to charge approx. INR 15000. The final charge depends on the share capital and other services rendered.
These companies are known to offer discounts from time to time – so it would be wise to keep an eye out for them.
What are the ongoing needs for managing an OPC?
There are two primary requirements of having an OPC
- One meeting in each half of the year. The gap between the two meetings must be at least 90 days
- Financial statements and Annual returns audit and filing them with the ROC
For more information, please have a look at the following links
- One Person Company registration
- How Much Does it Cost to Register an OPC In India?
- Sole Proprietorship VS OPC-Comparison Between two Business Structure
- MCA’s FAQs on One Person Companies (OPCs)
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