Ease of Setup:

It normally a Private Limited 10-12 working days, LLP 8-10 working days and OPC 10 to 12 working days to setup.

One Person Company Or Private Limited Company. The Government of India plans to reduce this to about a day by this April.

Who is it for?

One Person Company is meant for small entrepreneur who would otherwise start sole proprietorship like grocery shopkeepers, jewelers, medical shop owners, small food joints etc.  Individual consultants or technical professionals can start a One Person Company.

Limited liability Partnership is meant for startup technology and software companies, services companies with the low business volume lower than 1 Crore. Consultants, legal professional’s activities and architects etc. Prefer this while starting a new practice with a peer group.

Private Limited Company fits your requirements well if your company is growing fast.

Relaxed Compliance:

Limited Liability Partnership and One Person Company has far fewer legal and compliance requirements. This relaxed framework gives business owners some breathing space.

Private Limited Company is bound by law to keep records of their shareholder meetings and is expected to notify Registrar of Companies (RoR) if an operational structure or share holding pattern is changed.

Funding and Expansion:

A Private Limited Company is best supports rapid business expansion. Because it allows use of secured or unsecured financial instruments to compensate venture capitalists, banks or other creditors.

Limited Liability Partnership and One Person Company isn’t well suited to tackle rapid business expansion

Better Brand Value

Private Companies are more credible due to statutory audit compliance because external auditors perform the audit of business accounts.

This is not true for Limited Liability Partnership or a One Person Company. For more information about how to register your business. Talk to our customer champions.

Risk factor:

Private Limited, OPC, and LLP have the feature of Limited Liability and hence all the 3 options gives you peace of mind in business in terms of protection from legal-statutory liabilities.

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Apart from the many benefits, fewer compliances to abide by in a one person company is a big game changer for single entrepreneurs in India.

Introduced by The Companies Act, 2013 (No.18 of 2013), an OPC form of business aims to support small time entrepreneurs who may be carrying on a business as a sole proprietorship firm to enter the corporate framework of any industry.

If you are a single owner of the firm, there are certain compliance to check off before registering a one person company. A few important ones are listed below:

1. An OPC should have a minimum of one director and a maximum of fifteen directors.

2. It is compulsory for the registrar to be a citizen of India in order to form an OPC.

3. A person cannot incorporate more than five OPCs.

4. An OPC cannot convert itself to any form of the company unless two years have been expired from the date of incorporation of an OPC.

And in case the company revenue hits more than 2 crores or has a paid-up capital of over fifty Lakhs, it must be turned into a public or Private Limited Company within six months.

5. An OPC has perpetual existence, although to make this possible, there must be a nominee director to take charge in case of death or disability of the sole member.

6. An OPC is not allowed to carry out Non-Banking Financial Investment activities such as investment in securities of any corporate body.

7. A requirement of Annual General Meeting (AGM) and Extra-Ordinary General Meetings do not apply to an OPC.

8. An OPC must pay 30% of tax on profits. A minor cannot be a member or nominee of the OPC or can hold.

9. A minor cannot be a member or nominee of the OPC or can’t be the shareholder.

It is true that an OPC offers a suitable company form for a rising entrepreneur; it still has important requirements that need to be looked into well before opting to form a One Person Company.

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Earlier an entrepreneur who wanted to venture out alone had to go for the Sole Proprietorship.  This meant that entrepreneurs were prone to risks arising from unlimited liability. OPC was created with an aim to support young entrepreneurs who faced this problem.

The company is ‘a voluntary association of individuals’ this makes One Person Company an oxymoron.

Main differentiators of OPC compared to Sole Proprietorship are:

One person as shareholder/member/director

Registered as a Private Company

Has a common seal

Management rests with the promoter

Separate Finances for company and the promoter

OPC could be limited company; limited either by shares or guarantee

OPC could also be unlimited company

OPC should have the minimum paid up capital of rupees 1 lakh.

OPC cannot transfer its shares and it prohibited to invite public to subscription of its shares

Now that you know all the features, you would have understood that OPC is a mini version of a Private Company but without many legal strings attached.

Benefits of OPC compared to Sole Proprietorship are:

Limited Liability

Ownership or succession can be perpetually transferred

Separate legal entity, it’s seen as an artificial person with all constitutional rights

Separate property rights wherein the director in charge of making decisions on company’s behalf.

Credit history of company is scrutinized while borrowing funds

Corporate taxes are applicable

Restrictions imposed on OPC compared to Sole Proprietorship:

Shareholding

One person company has a sole director running the business. It also has a nominee director who would get the charge of business if the director passes away. Or becomes incapable of getting into contract. However, section 149 permits the promoter to appoint more than 15 directors after passing a special resolution.

Naming and Branding

‘One Person Company’ should always be mention with the name of the company. Foreign citizens, minors, nonresidents, a person incapacitated to contract can’t form an OPC.

Other Caveats

OPC can lose its special rights:

if it’s paid up capital exceeds RS 50 lakhs or

Average annual turnover exceeds 2 crores in 3 immediately preceding consecutive years

There are other important differences between One Person Company and a sole proprietorship. The below Infographics illustrate those contrasts between an OPC and a Sole Proprietorship.

Read also: 8 Benefits of Registering a Limited Liability Partnership

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A Lean Startup Ecosystem, lets an entrepreneur come up with an idea and start a business! It’s that special place where you get to work on what you love without distractions.

Here, lean doesn’t mean cheap. But it means smart, prioritized and focused. Primarily, a Lean Startup Ecosystem should complement a business’ strength and supplement its weakness. And find owners opportunities that other startups seldom recognize.

We understand that early stages of any startup are a make or break situation. That is why a startup needs to institute process or policies that keep the operational cost as low as possible. A lean startup ecosystem helps entrepreneurs to achieve this until they are ready for their big takeoff.

Eric Ries the creator of Lean Startup methodology encourages Startups to ask these questions.

“Should this product be built?” and

“Can a sustainable business be built around this set of products and services?”

To see order amidst chaos and add value to your Startup. Entrepreneurs should ideally focus on smart goals. Such as coming up with a Minimum Viable Product/ Service. Or focusing on improving the business process. This activity requires a lot of time to imagine, iterate and improve.

To achieve this, the promoter must be asking these questions to all stakeholders.

Where does our strength lie?

Which aspect of the business should we invest our maximum time in?

How do we make sure that quality time is spent on most vital aspects of our business?

Should we get things outsourced?

A Startup would be naturally centered on a core offering. Because most of its people would be experts in that field. That’s why; Lean Startup Ecosystem should deliver a canopy of support and guidance services, such as

Legal and Compliances Services

A Startup has to meet various statutory requirements and compliances.

Firstly, businesses need to decide on the legal form of business i.e. (One Person Company, Limited Liability Partnership or Private Limited Company). This decision is vital to the success of any business. That is why entrepreneurs must do their research and weigh out their options. Then, find an expert to make these decisions confusion free.These are some post-registration norms and compliances that need to be fulfilled:

These are some post-registration norms and compliances that need to be fulfilled:

Getting a Company’s Permanent Account Number

Opening a Current Account

Service Tax Registration or TIN registration

Other compliances

Compliances that every Limited Liability Partnership or Private Company should abide by after registration:

Accounting and Finance

Tax filings

Patent and Trademark registration

Legalsyne’s tailored services will make these initiatives easy to achieve.

Secretarial Services

Legalsyne provides a secretary every time you need one. We help you to adhere to the laws and regulations, compliances and filing requirements, such as.

Formation of a company

Maintenance of all statutory registers

Preparing and submitting of annual returns of the business

Attending the preparation of minutes

Attending the drafting of resolutions for Board and General Meeting

We take care of all the regulatory compliance so that you can have a peaceful mind.

Finance and Accounting Services

Strict accounting and financial standards are something every growing Startup finds tough to comply with. Below are some reporting requirements every growing business should fulfill.

Bookkeeping and accounting

Preparing quarterly and annual financial statements, budgets etc.

Making transactions comply with tax and regulatory norms

Auditing and support services

Statutory tax filings

It would be pretty hard for Startups to get their head around these complex legal compliances. Legalsyne understands these needs and our experts can help get these tasks done fast.

HR and Placement Services

Startups do spend a lot of time on getting the right talent. Timely access to affordable talent pool is the greatest HR roadblock a Startup must overcome.

Most of the time talent hunting works perfectly well on referral. But, as the business grows Startups get help from HR consultants. But they don’t often understand or fulfill specific requirements of Startups.

Expanding their team is always a headache for Startups. Because owners need to put a lot of effort to find people that fit their requirements.

Legalsyne understands human resources requirements of a Startup. That is why we created tailored HR service, portfolio placement, and payroll services that are appropriate for your needs.

Marketing Services

Marketing and positioning offerings globally have always been a problem area for Indian Startups.

Startups haven’t got a hang of branding yet. Branding is an activity which starts with a Startup incorporation. This requires unrelenting commitment, consistency, and remarkability in offerings. Quality marketing processes and strategic initiatives need to go hand in hand to improve marketing ‘ROI’.

This is why, verified email lists, optimized email messages, template designs and subject lines, an agile social media outreach and sales process management etc. becomes very important in this scenario.

You’d need an agile and cutting edge marketing program managed by experts, to achieve your goals faster. That’s where Legalsyne experience comes in.

Cowork Spaces

Every early stage Startup finds it hard to narrow down on an affordable workspace. Warm and contemporary co-working spaces kick starts creativity. But many promoters run behind real estate agents, brokers or they personally check office spaces. This leads to a decline in the productivity of the business.

This is why, Cowork spaces should be part of any Lean Startup Ecosystem.

Legalsyne Cowork Space with proximity to city center, transport hubs, fast net connectivity and uninterrupted power is a blessing to any Startup.

Virtual Offices

Setting up the business getting work space is simply now. Legalsyne Virtual 0ffices is the only place in Bangalore where you get a virtual office address in a prime location.

We support entrepreneurs by delivering services such as mail divert services, fax forwarding. Our experts also provide you tailored answering services and custom mailboxes.

Smart Startups would leave it to experts after clearly stating their business goals. This is the lean way of getting work done painlessly, fast and effectively.

So, what do you think?

For a more detailed walkthrough, click the here contact us.

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