ADVANTAGES OF ONE PERSON COMPANY
An One Person Company (OPC) Private Limited has numerous advantages when compared with Companies and Proprietorship firm.
The One person Company (OPC) incorporates into the meaning of “Private Limited Company” given under section 2(68) of the Companies Act, 2013. Subsequently, an OPC will be required to conform to procurements relevant to private limited companies. On the other hand, One Person Company has been given various exclusions and in this way have lesser compliance related burden.
An One person Company being an incorporated entity will likewise have the component of perpetual succession and will make it simpler for entrepreneurs to raise capital for business. The OPC is an artificial entity from its proprietor. Creditors should therefore be warned that their claims against the business can’t be squeezed against the proprietor.
Simple to Get Loan from Banks:
Banking and financial institutions prefer to lend money to the company instead of proprietary firms. In a large portion of the circumstances, the entrepreneurs to convert their firm into a Private Limited company before authorizing funds. So it is ideal to register your startup as an One Person company rather than proprietary firm.
Annual Return Filing:
One Person Company’s yearly return is required to be signed by a director. The mandatory requirement of Company Secretary Signature is not applicable to OPC.
No Prerequisite to Hold Annual or Extra Ordinary General Meetings:
Just the resolution might be conveyed by the member from the organization and entered in the minutes book and signed and dated by the member and such date should be considered to be the date of meeting.
An One Person Company might lead at least one meeting of the Board of Directors in every 50% of a calendar year and the gap between the two meetings shall not be less than ninety days.
DISADVANTAGE OF ONE PERSON COMPANY
There are few disadvantages in forming one person company which are discussed below:
High Tax Rate:
As a corporate form, you cannot avail tax slab advantage. In proprietary, you are required to pay according to your salary at 10%, 20% or 30% tax rate. But in the case of One person company, you you are directly charge 30% income tax. High tax rate is big disadvantage of one person company.
Compliance cost of partnership firm or proprietary is very low compare to One Person Company.
OPC is Included in Name:
You are required to specify One person company in your company name in bracket. There is slight lower impression that the organization is kept running by one and only person. Other side, in the event that you start your company with couple of shareholders, the administration can’t be dedicated and you can offer impressions to customer moreover.
One Person Management:
Shareholder is one and all the decisions are done by a person. On the off chance that he is insightful, it is great however in some cases cross check is required for business development. Company’s success and growth is all dependent on one person’s decision taking ability.
OPC Incorporation is Allowed:
You can incorporate one and only OPC (One Person Company). In the event that you need to start other company as OPC, it is not permitted. In today’s quick economy, more than one business can differentiate income and spare you from enormous misfortunes. One and only stream of pay or business is unsafe these days. Having this condition is snag for serial business people.
Not Suitable for High Turnover:
There is procurement of automatic conversion of One Person Company in Private Limited Company. in the event that you appraise high turnover of your business or you have effectively high turnover, better choice is build up private limited company than One Person Company. Setting up OPC and after in some cases conversion of one person company in Private Limited Company is not a good idea.