Advantage and Disadvantage of One Person Company (OPC)

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A One-person Company (OPC) Private Limited has numerous advantages when compared with Companies and Proprietorship firm.

Advantages of One Person Company

1. Compliance burden

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 a lesser compliance-related burden.

2. Perpetual Succession

A 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.

3. 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 a One Person company rather than a proprietary firm.

4. Annual return filing

One Person Company’s yearly return is required to be signed by a director. The mandatory requirement of Company Secretary Signature does not apply to OPC.

5. No prerequisite to holding annual or Extra-ordinary General Meetings

Just the resolution might be conveyed by the member from the organization and entered in the minute’s book and signed and dated by the member, and such a date should be considered to be the date of the meeting.

6. Board Meeting

One Person Company might lead at least one meeting of the Board of Directors every 50% of a calendar year, and the gap between the two meetings shall not be less than ninety days.

Advantage and Disadvantage of One Person Company
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Disadvantages of One Person Company

There are a few disadvantages of a one-person company that are discussed below:

1. High Tax Rate

As a corporate form, you cannot avail of the 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 are directly charged 30% income tax. The high tax rate is a big disadvantage of a one-person company.

2. Consistency Cost

Compliance cost of partnership firm or proprietary is very low compared to One Person Company.

3. OPC is included in Name

You are required to specify a one-person company in your company name in the bracket. There is a slightly lower impression that the organization is kept running by one and only person. Another side, if you start your company with a couple of shareholders, the administration can’t be dedicated, and you can offer impressions to customers moreover.

4. One Person Management

A shareholder is one, and that person makes all the decisions. On the off chance that he is insightful, it is excellent; however, in some cases, cross-check is required for business development. The company’s success and growth are all dependent on one person’s decision-making ability.

5. OPC Incorporation is allowed

You can incorporate one and only OPC (One Person Company). If you need to start another 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 an only stream of business is unsafe these days. Having this condition is a snag for serial business people.

6. Not suitable for high turnover

There is the procurement of automatic conversion of One Person Company into a Private Limited Company. If you appraise a high turnover of your business or you have effectively high turnover, the better choice is to build up a private limited company than One Person Company. Setting up OPC and, after in some cases, conversion of one person company into a Private Limited Company is not a good idea.

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