What does starting a business mean to you? For many, it is a moment of hope and dreams. Sounds a bit overwhelming, Right? Well, why wouldn't it be, especially now when the waves of entrepreneurship are all around the country. So, what’s the first step that you would take as an entrepreneur to establish your business? Registering it as a legal entity would be the best and that requires you to select the right business structure for it as per the scope of operations. In recent years, One Person Company, which is also known as OPC, has gained significant attraction from hundreds and thousands of entrepreneurs in India as a popular form of business structure. In fact, One Person Company (OPC) is now only second to the Private Limited Company when it comes to the most preferred legal structures for businesses. And the reason behind this is simple - ‘Benefits.’ With One Person Company Registration, a business entity not only gets an opportunity to work as a separate and legal entity but also the advantages such as limited liability just like a private limited company, and the authority to start and manage an entire business single-handedly like Sole Proprietorship.
One Person Company (OPC)
What does OPC mean? Let’s start with a basic definition - One Person Company, or we should say, OPC registration is nothing but the formulation of a company with only a single person as a member, which is unlikely as the traditional company requires at least two members. In OPC, its owner acts as the most powerful authority. So, what was the need behind its introduction? The government of India made significant changes with the introduction of the Companies Act 2013 and the motive was to ease the process of doing business in the country and improve corporate governance. With these changes came the concept of One Person Company, conceptualized by the Ministry of Corporate Affairs to fill the gaps for entrepreneurs between a proprietorship and a private company set-up.
Earlier, there were no provisions for an individual to start his own company, except the option of Sole Proprietorship, which is not a distinct legal business entity, hence the person (sole proprietor) handling it is responsible for any credit facility available. Not just that, the absence of legal status as an incorporated entity also made financing and business credit harder to procure. But with OPC, the Indian government has presented a hybrid form of a sole proprietorship and a private limited company, offering the benefits of both.