One Person Company
Business Setup | Registrations | Limited Liability Partnership
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A One Person Company is a special type of legal structure that enables one person to own and run the entire company while yet offering all the advantages of a corporate entity. One Person Company , which were first introduced to assist sole proprietors and small enterprises, combines the benefits of operational autonomy and limited liability. An One Person Company unites ownership and decision-making under one person by designating that person as both the sole shareholder and director. This form isolates personal assets from business obligations and offers minimal liability protection to the sole proprietor.
An important characteristic of a One Person Company is that it does not require a minimum of two members, as is customary with other corporate bodies. Because of this, business owners may create a corporate presence without having to deal with the hassles of running a large organization. An One Person Company provides restricted liability, but it also requires the appointment of a nominated director to act as the sole director’s backup in the event of incapacitation. One Person Company offer a simplified corporate framework that strikes a compromise between individual entrepreneurship and the advantages of a corporate structure, making them particularly advantageous for small firms and startups. The establishment and operation of one-person companies are usually governed by the Companies Act in different jurisdictions.
Advantages of a One Person Company
1.Limited Liability:
The main benefit of an One Person Company is that it offers the lone owner little responsibility. This lowers the owner's personal financial risk since it keeps their personal assets and corporate obligations apart.
2. Single Ownership and Control:
An One Person Company is owned and operated by a single person, as the name implies. As a result, the owner has total control over the business and may make all decisions without consulting other stakeholders.
3. Ease of Formation:
In comparison to other organisational forms, the procedure of founding and registering a One Person Company is very straightforward and efficient. Less paperwork and compliance obligations are involved.
4.Legal Recognition and Status:
One Person Company are different legal entities from their owners. Customers, suppliers, and financial institutions see the company more favourably as a result of its official recognition.
5. Perpetual Existence:
An One Person Company has eternal existence, which means that even in the event of its owner's demise or incapacitation, it will always exist. Because of the stability and continuity it offers, the firm can survive long after the owner passes away.
6.Access to Credit and Funding:
One Person Company can raise money in a number of ways, including private investments, venture capital, and bank loans. A corporate structure, as opposed to a single proprietorship or partnership, could facilitate the acquisition of finance.
7.Tax Benefits:
One Person Company may be able to save money by taking use of certain tax advantages, such as reduced corporate tax rates and deductions. The particular tax benefits may change according to local tax laws.
8.Professional Image:
Using the suffix "One Person Company" in the business name to operate as an One Person Company presents a more formal and professional image. Establishing trust with partners, clients, and other stakeholders can be facilitated by doing this.
9.No Minimum Capital Requirement:
One Person Company is exempt from the obligatory minimum capital requirement, in contrast to certain other corporate structures. This gives the owner freedom in choosing the company's original capitalization.
10.Ease of Transfer:
By changing the ownership structure or transferring shares, it is simple to transfer ownership of an One Person Company. This facilitates easy succession planning and, if needed, ownership transfers.
Registration process of one person company
The registration process for a One Person Company in India involves several steps. Here is a general outline of the process:
1. Obtain Digital Signature Certificate :
The first step is to obtain a Digital Signature Certificate for the proposed director of the One Person Company. The DSC is used to digitally sign the electronic documents required during the registration process.
2. Obtain Director Identification Number:
The next step is to obtain a Director Identification Number (DIN) for the proposed director. This is done by filing Form DIR-3 with the Ministry of Corporate Affairs (MCA)
3.Name Reservation:
Once the DSC and DIN are obtained, the applicant needs to file Form SPICe+ (INC-32) to reserve a unique name for the One Person Company. The name should be compliant with the naming guidelines specified by the MCA.
Minimum Requirements
As per the Companies Act 2013, there are minimum requirements that need to be met for one person company incorporation online.
- Unique business name
- No minimum capital requirement
- A nominee must be appointed during incorporation
- Address proof of office
Documents required for One person company
For incorporating your business as a One Person Company, you need to provide proper identity and address proof. The documents are required to be submitted to the Registrar of Companies.
- Passport size photographs
- Copy of Aadhar Card or Voter ID
- Copy of PAN Card
- Copy of Bank Statement (not older than two months)
- Valid address proof of office which can be the latest electricity or any other utility bill
- If it is a rented office, then No Objection Certificate is required from the owner of the office.
Documents required for One person company
For incorporating your business as a One Person Company, you need to provide proper identity and address proof. The documents are required to be submitted to the Registrar of Companies.
Documents of partners
