Introduction

Consider the example of Radhika, an independent interior designer in New Delhi. After a few successful years as a freelancer, she wanted to give her business legal identity, credibility, and financial security—without involving other partners or shareholders. For professionals like Radhika, registering a One Person Company (OPC) offered the perfect blend of autonomy and protection.

The concept of OPC was introduced under the Companies Act, 2013, allowing a single person to operate a private limited company while enjoying benefits such as limited liability, structured compliance, and a distinct legal identity.

What is a One Person Company (OPC)?

An OPC is a company that has only one person as a shareholder and director. This structure is ideal for solo entrepreneurs who want to operate a business with the recognition and credibility of a private limited company, while retaining full control.

Example: If Radhika registers her design firm as “Radhika Interiors OPC Pvt. Ltd.,” the company gains its own legal identity, and her personal finances remain protected even if the business incurs debts or losses.

Key Tax Benefits and Operational Advantages of an OPC

1. Limited Liability Protection

The owner’s liability is limited to the amount invested in the business. Personal assets such as vehicles, savings, or real estate are not at risk if the business faces losses.

Example: If an OPC takes a loan of ₹5 lakhs and defaults, and the promoter has invested ₹1 lakh as capital, only the business assets can be liquidated—not the owner’s personal savings.

2. Legal Recognition and Business Credibility

OPCs enjoy the recognition of being a private limited entity. This improves brand image, makes it easier to obtain loans, and builds trust with clients and vendors.

Example: A software consultant converting their sole proprietorship to an OPC may find it easier to sign contracts with large companies due to enhanced credibility.

3. Complete Ownership and Control

The sole member acts as both the director and shareholder, enabling seamless decision-making without interference from partners or investors.

4. Easy Succession

The nominee appointed during incorporation takes over the company in case of the owner's death or incapacity, ensuring business continuity.

5. Access to Startup India Benefits

OPCs registered under the Startup India scheme may be eligible for tax exemptions and funding opportunities subject to meeting prescribed criteria.

Limitations of OPC Structure

Despite its advantages, OPCs come with certain limitations that founders should be aware of.

1. Restriction on Ownership

Only one individual can be the member of an OPC. Inclusion of partners or shareholders is not allowed unless the OPC is converted into a Private Limited Company.

Example: If Radhika later wishes to include her brother as a co-owner, she must first convert the OPC to a multi-member company.

2. Compliance Requirements

OPCs are required to meet annual compliance obligations similar to other companies. This includes appointment of auditors, filing of financial statements, annual returns, and maintaining statutory registers.

3. Limited Funding Options

Most angel investors and venture capitalists prefer investing in private limited companies with multiple shareholders and a scalable governance structure.

Process of Registering an OPC in India

Let us assume Ankit, an online seller, wants to register his business as an OPC. Here is how the process works:

Step 1: Obtain Digital Signature Certificate (DSC)

The director must procure a DSC for signing e-forms.

Step 2: Apply for Director Identification Number (DIN)

DIN can be obtained through the SPICe+ form on the Ministry of Corporate Affairs (MCA) website.

Step 3: Name Reservation

Use SPICe+ Part A to reserve a unique name for the company. Names should comply with MCA naming guidelines.

Step 4: Draft MOA and AOA

Memorandum of Association (MOA) and Articles of Association (AOA) outline the company’s objectives and rules of operation.

Step 5: File SPICe+ Part B and Related Forms

Submit the incorporation documents including AGILE-PRO for PAN, TAN, GST registration, and ESIC/EPFO.

Step 6: Issuance of Certificate of Incorporation

Once approved, the Registrar of Companies (ROC) issues the Certificate of Incorporation along with the Company Identification Number (CIN).

Annual Compliance Requirements for OPC

Penalties for Non-Compliance

Relevant Government Portals

• MCA Portal – Incorporation and company filings

• Income Tax Portal – Income tax returns and updates

• GST Portal – GST registration and filings

• Startup India Portal – Startup registration and benefits

Conclusion: Should You Opt for an OPC?

For solo founders running consulting firms, tech services, or independent practices, OPCs provide an ideal structure to begin formal business operations in India. They offer the legal benefits of a private limited company while maintaining ownership simplicity.

As CA (Dr.) Arpit Yadav, Co-founder of TwoTax, rightly puts it:

“The OPC model bridges the gap between informality and corporatization. For individual entrepreneurs, it’s the most effective way to scale responsibly.”

How TwoTax Can Help You

• End-to-end OPC registration and legal documentation

• Assistance with name approval and nominee documentation

• Ongoing compliance and annual filings

• Conversion to private limited company when ready to scale