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Advantages and Disadvantages of One Person Company

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Advantages and Disadvantages of One Person Company, Check Advantages of OPC, and also Check Disadvantages of OPC, What are the pros and cons of One Person Company. this article is about the Advantages and the disadvantages of the One Person company. One Person Company is a company which can be incorporated same as the incorporation of the private limited company. This type of company came into existence after the Companies Act, 2013 coming into the existence. This type of company has been encouraged because any person can start individually without worry of any other subscriber or shareholder. There are many pros and cons to it. As there is having only one person, it will have to give certain exemptions to such company.

Advantages and Disadvantages of One Person Company

Advantages of One Person Company:

  1. The first and the foremost benefit to the OPC is that the compliance procedure becomes simpler as they have been provided many exemptions in comparison to Private Limited Company.
  1. It will make the concept of perpetual succession, which would make the differentiate between owner or director and the corporate entity.
  1. As it becomes a corporate entity after its incorporation it allows small enterprises to easily avail loans and the credit facilities from the bank which where before available to only the private limited companies.
  1. As this kind of company needs to be promoted so there are many expenses are straight away allowed which are not in case of one person company. For eg If the owner provides land for the company than it can take the rent and claim it as expense from the point of view of one person company.
  1. There are many relaxations which are given to the OPC which are not available to other private limited company such as there is no need to hold the annual or general meeting every year, there is no need to maintain the quorum during the meetings, no need to maintain the minutes as there is no need to held the general meetings, very few forms are required to fill the forms for the ROC filings, mandatory rotation of auditor not required.
  1. The control over the company is of the single person so taking the decisions making becomes very much easy.
  1. The most beneficial reason for incorporating a one person company is that it would be limited liability company and the owners would be liable only till the amount upto which they are limited there liability.
  1. The OPC can also include name “Private Limited Company” after its usual name.
  1. As it is protected by only limited liability, so the personal assets of the persons are safeguarded.

Must Read – One Person Company – An overview

Disadvantages of One person company:

  1. The main and the worst part of the OPC is that as it has become now a corporate entity, the flat rate of 30% would be applied for income tax and no relaxation has been given to this part.
  1. It involves more paper work than incorporating a sole properioter ship.
  1. The owner who has incorporated one person company once is not eligible to incorporate another one person company not as owner and not as nominee of that other company also.
  1. The OPC cannot invest into the shares and securities of the another corporate which is not a good part for OPC.
  1. After OPC is been incorporated, it cannot be converted into Section 8 company which is availed to the other private limited company.
  1. It is not compulsory to make a general meeting but if they are meeting up the general meeting or the board meeting voluntarily than they have to all the criteria which are required to be done in case of other private limited company.
  1. Once OPC is incorporated it cannot be converted to any private or public limited company until the expiry of 2 years from the date of incorporation.

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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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