The fact that the owner is exclusively in charge of all matters is the Main Benefit of starting a One Person Company. The firm’s affairs are subject to less liability and get advantages comparable to those of a Private Limited Company. For a one-person business, the owner is the only most powerful authority. One Person Company is defined as a corporation with just one person as an exclusive member in Section 2(62) of the Companies Act, 2013. Typically, it is a firm that is registered and run by a single individual. Entrepreneurs prefer this type of business over a sole proprietorship because they may clone their business and avoid the difficulties associated with registering a sole proprietorship. We’ll go through all the Benefits of a One Person Company in this blog. 

Nature of One Person Company 

A Private Limited Company registration is an option for One Person Company. Unless specifically stated otherwise in the relevant Act or rules, the provisions that apply to a private corporation will apply to any OPC. A One Person Company can quickly become a Public Company or a Private Limited Company. It is crucial to understand that the phrase “One Person Company” must always appear after the company name. Comparing OPC Registration to other company types, there are many benefits. 

Benefits of One Person Company in India 

Following are the benefits of OPC-  

1. Advantages of Small-Scale Industries 

One Person Company can take advantage of a number of incentives offered to Small Scale Industries (SSI), including easier access to bank financing, any safety up to a certain extent, cheaper loan interest rates, and a number of advantages under the Foreign Trade Policy and other associated programs. 

2. Only One Owner 

Having a single owner is preferable to having multiple owners. Making decisions quickly and conducting business without outside interruption or ideas is tremendously advantageous. Belonging inspires people to expand their businesses. 

3. Credit Score 

One Person Company can still apply for the loan even with a low credit score. If the credit score of the One Person Company is within acceptable ranges, it is not significant. 

4. Interest Paid on Any Overdue Payments 

As One Person Company is a newly formed Micro, Small, or Medium sized Business, which is covered by the aforementioned act, it is eligible for all the incentives provided by the Enterprises Development Act, 2006 (EDA). This states that if the buyer or seller receives a late payment, they are entitled to interest at a rate that is triple the bank’s rate. 

5. Gain in Status and Credibility 

Any business that operates as a company always has a higher level of status and confidence. 

6. Simple Funding 

A private limited company can raise money through venture capital, angel investors, banking institutions, etc. if it is a one-person business. Any One Person Company has the ability to raise money and transform it into a private business. 

7. Limited Liability 

One advantage of a One Person Company is that the owner can take more business risks without worrying about losing any personal assets or being exposed to excessive responsibility because the One Person Company’s liability is restricted to the amount of each share’s worth. It serves as a form of support for fresh, young, and creative business start-ups. 

8. Minimum Conditions 

There must be identical shareholder and director, at least one shareholder, one nominee and one director should be there. To distinguish OPCs from other businesses, the letters “OPC” must be added to the end of the company name. 

9. Tax Savings and Flexibility. 

OPC enters into a binding agreement with its shareholders or directors. This means that you can get paid as a director, a lessor, or a creditor and lend money to your own business while still earning interest. Rent, interest^[1] and director compensation are all deductible expenses that lower the company’s profitability and ultimately lower your company’s taxable income. 

10. Legal standing and social acceptance of your company 

The most common type of corporation in the world is one person. Instead of proprietorship businesses, large enterprises prefer to work with Private Limited Companies. Private limited business structures benefit from corporate status in society, which enables business owners to hire top talent and keep them on staff by bestowing titles like directorships. 

11. Shares Transferability 

One Person Company has a solitary stockholder. The problem of transferring a portion of the share is completely moot since doing so would make the business no longer be a “one person” business. Transferring every share is also impractical because it would alter the company’s whole structure as the owner of the business would change. Since the matter has not yet been resolved, the legal interpretation may help us understand why share transfers are prohibited in OPCs. 

12. Independent Property 

As an OPC develops its own personality and performs as a distinct legal body, it will have its own unique property. The OPC will take ownership of its assets, and the members won’t have any rights to insurance on those assets. 

Conclusion 

One Person Company, which is a new concept in India, already sees a big boom. A huge impact on the economy and development of a nation is expected. It gives opportunities to many and will, therefore, bring creative and young minds in front of everyone. The success of OPC is purely dependent upon its implementation but the concept is a necessity in the changing business arena where entrepreneurs are require taking risk and at the same time needs protection to cover up that risk. In the end it can be concluded that, the One Person Company has its own benefits and at the same time there exist various disadvantages as well and with the evolution of time the disadvantages can be curbed and the One Person Company can be made more effective and advantageous so that it can serve its purpose better. For more information you can also reach at Bizadvisor.io

Read our article:A Complete Guide on One Person Company Formation