What is a One Person Company?
A One Person Company (OPC) is a unique business structure introduced under the Companies Act, 2013 that allows a single entrepreneur to operate as a company with limited liability protection. It bridges the gap between a sole proprietorship and a Private Limited Company.
Think of OPC as a "company of one" - you get the credibility and protection of a company structure without needing a partner or co-founder.
Key Benefits of OPC
1. Single Owner Structure
Only one person is required as both director and shareholder. No need to find a partner or co-founder just for compliance purposes.
2. Limited Liability
Your personal assets are separate from the company. If the business faces financial trouble, your home, car, and personal savings are protected.
3. Lower Compliance
OPC has relaxed compliance requirements compared to a Pvt Ltd - no requirement for Annual General Meeting, and financial statements can be signed by a single director.
4. Tax Benefits
OPC is taxed at 25% under Section 115BAA (same as Pvt Ltd), compared to slab rates of up to 30% for sole proprietorships.
5. Easy Conversion
When your business grows, you can seamlessly convert your OPC to a Private Limited Company.
Eligibility Criteria
- •Only Indian citizens can form an OPC
- •Only a natural person (not another company) can be a member
- •A person can be a member of only one OPC
- •Must have a nominee who becomes the owner if something happens to the founder
- •The nominee must also be an Indian citizen
OPC Registration Process
Step 1: Obtain DSC
Get a Class 3 Digital Signature Certificate for the sole director. Cost: Rs 990.
Step 2: Name Approval
Apply through RUN service on MCA portal with 2 name options. Fee: Rs 1,000.
Step 3: File SPICe+ Form
Same integrated form used for Pvt Ltd registration, with some OPC-specific fields:
- •Details of the sole member/director
- •Nominee details and consent (INC-3)
- •MOA and AOA in OPC format
Step 4: Receive Incorporation Certificate
Get CIN, PAN, TAN, and DIN upon approval.
Documents Required
For the Sole Director:
- •PAN Card
- •Aadhaar Card
- •Passport-size photograph
- •Address proof
For the Nominee:
- •PAN Card
- •Aadhaar Card
- •Consent letter (INC-3)
For Registered Office:
- •Rent agreement or ownership proof
- •Utility bill
- •NOC from owner
OPC Registration Fees
| Component | Cost |
|---|---|
| DSC (1 person) | Rs 990 |
| Name Reservation | Rs 1,000 |
| SPICe+ Filing | Rs 500 (for Rs 1 lakh capital) |
| Stamp Duty | Varies by state |
| Professional Fee (Setup India) | From Rs 1,499 |
| Estimated Total (Delhi) | Rs 4,000-5,000 |
OPC vs Sole Proprietorship
| Parameter | OPC | Sole Proprietorship |
|---|---|---|
| Legal Status | Separate entity | Same as owner |
| Liability | Limited | Unlimited |
| Taxation | 25% corporate rate | Slab rate (up to 30%) |
| Credibility | High (company status) | Low |
| Bank Loans | Easier | Difficult |
| Compliance | Medium | Minimal |
| GST Threshold | Rs 40 lakh | Rs 40 lakh |
| Fundraising | Limited | Not possible |
| Registration Cost | Rs 4,000-5,000 | Rs 500-1,000 |
Mandatory Conversion to Pvt Ltd
An OPC must mandatorily convert to a Private Limited Company if:
- •Paid-up capital exceeds Rs 50 lakh, OR
- •Average annual turnover exceeds Rs 2 crore during the preceding 3 consecutive years
The conversion must be completed within 6 months of triggering the threshold.
Annual Compliance for OPC
| Compliance | Due Date |
|---|---|
| Financial Statements (AOC-4) | Within 180 days of FY end |
| Annual Return (MGT-7A) | Within 60 days of AGM |
| Income Tax Return (ITR-6) | September 30 |
| DIR-3 KYC | September 30 |
| Board Meeting | Minimum 2 per year |
| Statutory Audit | Mandatory |
Note: OPC is exempt from holding an Annual General Meeting.
When OPC is the Right Choice
- •You are a freelancer wanting limited liability and professional credibility
- •You are a solo consultant or service provider
- •You are testing a business idea before bringing in co-founders
- •Your expected revenue is under Rs 2 crore
- •You want company status for government tenders or B2B clients
When to Avoid OPC
- •You plan to raise venture capital (VCs require Pvt Ltd)
- •You expect rapid growth beyond Rs 2 crore turnover
- •You want to add partners or co-founders soon
- •You need to issue ESOPs
Conclusion
OPC is the perfect entry point for solo entrepreneurs who want the credibility and protection of a company without the complexity of managing multiple shareholders. Starting at just Rs 1,499 with Setup India, it is the most affordable way to formalize your business.
Register your OPC today - our CA team will handle everything while you focus on building your business.