Metiscon Solutions

REGISTER START-UP AS ONE PERSON COMPANY

One Person Company is a new type of business entity that allows a single entrepreneur to operate a corporate entity with limited liability protection.

Introduced by the Companies Act 2013 as an improvement over the sole proprietorship it gives a single promoter full control over the company while limiting his/her liability to contributions to the business. This person will be the only director and shareholder. There is a nominee director but with no power until the original director is incapable of entering into contract. If an OPC hits an average three-year turnover of over Rs. 2 crore or has a paid-up capital of over Rs. 50 lakh, it must be turned into a private limited company or public limited company within six months.

When you register an OPC or one person company it is essential to understand that both the member and nominee have to be a residents of India. An OPC is exempted from stringent legal compliances of general meeting, board meetings, quorums, voting inclusion of cash flow statements in financial statements, mandatory rotation of an auditor. Appointment of a company secretary is  not essential and the annual return of an OPC can be signed by its director in case no company secretary has been appointed.
An OPC is not allowed to carrying any Non-Banking Financial Investments activities, converting a wholly owned subsidiary into an OPC and also issuing any kind of Employ Stock Scheme. The Income Tax, Act does not recognise the concept of an OPC – it is he Income Tax, Act, 1961 does not recognise the concept of an OPC and it is taxed as a private company whereas sole proprietors are taxed at the rate applicable to individuals

OTHER RELATED SERVICES

REGISTRATION
GOODS AND
SERVICES TAX

Most businesses choose to register for GST right from the beginning even if it does not apply to them immediately since it has multiple advantages.

REGISTRATION PROFESSIONAL TAX

Has to be done within 30 days of setup. in many states even if there are no employees when the business starts its journey.

REGISTRATION
SHOPS AND ESTABLISHMENTS

A law driven by welfare of workforce almost all businesses fall within the scope of this state law and are required to register within 30 days

REGISTRATION
UDYAM AADHAR
CERTIFICATE

A facilitating legislation for the benefit of Micro Small Medium Enterprises (MSME) this provides access to a host of benefits for the business

DOCUMENTATION FOR DIRECTORS & PLACE OF BUSINESS

DOCUMENTS REQUIRED DIRECTOR & NOMINEE

COMPULSORY

  1. Passport size photograph
  2. PAN Card – scan of front and reverse
  3. Aadhaar Card – all 12 digits must be clearly visible

IDENTITY PROOF - any one document

  1. Passport
  2. Driving License
  3. Voter ID

** The director need not presently be resident at the address mentioned in the ID proof document.

ADDRESS PROOF - any one document

  1. Electricity Bill
  2. Bank Statement
  3. Landline or Broadband bill
  4. Mobile Phone Bill

** (1) Bill should be in the name of director – joint names are acceptable (2) Bill should be less than 60 days old.

 

DOCUMENT REQUIRED FOR PLACE OF BUSINESS

OWNED BY DIRECTOR

  1. Electricity Bill OR   Landline Bill   OR Broadband bill   OR Gas Bill
  2. No Objection certificate from director

** (1) Proof of ownership like sale document may be called for by MCA if it considers it necessary. (2) Utility bill must be less than 60 days old at time of application

RENTED OFFICE PREMISE

  1. Rental Agreement
  2. Electricity Bill OR Landline Bill OR Broadband bill OR Gas Bill
  3. No Objection certificate from landlord

** Utility bill must be less than 60 days old at time of application

TEMPORARY OFFICE PREMISE

A company may be registered at a temporary premise with a utility bill and and a No Objection from the owner of the property in the same way as if owned by director.

** If the option of a temporary office is taken then the company is required to submit details of its’ registered office within 30 days of its’ incorporation. 

STEPS TO REGISTER YOUR STARTUP COMPANY

WHAT FACTORS YOU SHOULD CONSIDER

Once you have a vision for your business you will need a vehicle or structure for delivering it which is the organisation. To choose the format of the organisation you will need to consider recognisation of the structure or credibility, risk associated with it, speed and flexibility of decision making, ability to quickly scale up and and ease of access to funding. CONGRATULATIONS ON CHOOSING A ONE PERSON COMPANY

THIS IS THE BEGINNING OF YOUR BRAND

Giving your organisation a name and getting it approved is initiation. Once name is approved you can also consider booking a domain name and possibly getting it trademarked sometime in the future

DIRECTORS, PLACE OF BUSINESS & AFFIDAVITS

Documents pertaining to the identity and address proof of the director,nominee and place of business and mentioned above need to be collected. Declarations and affidavits also need to be done

DOCUMENTS THAT DEFINE THE ORGANISATION

Due care must be taken to draft these critical documents that define the organisation: in layman terms the Memorandum of Association (MoA) defines the scope of business while the Articles of Association (AoA) define the internal rules of management of the organisation

INCORPORATION

Application made all attachment of proof of identity, address, affidavits, MoA and AoA and if in order company get incorporated with CIN number for company & DIN number for directors whilst the income-tax department gives PAN & TAN number

STATIONERY, BANKING, OTHER CERTIFICATIONS

You need to get stationery and visiting cards done, book your domain and open bank account for the company. Over the next month you need to have the first board meeting and possibly get registered for GST, MSME, Shops & Establishments and Professional Tax. You also need to appoint the first auditors, print and send share certificates, apply for certificate of commencement of business

TIMELINE FOR INCORPORATION OF COMPANY

OUR COMPANY INCORPORATION PACKAGES

FEATURES OF PRIVATE LIMITED COMPANY

SEPARATE LEGAL ENTITY : Private Limited Company is a legal entity and a juristic person established under the Companies Act. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company’s debts.

 

UNINTERRUPTED EXISTENCE : Private Limited Company has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.

 

EASY TRANSFERABILITY: Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates’ is sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.

 

BORROWING CAPACITYPrivate Limited Companies can raise equity funds in India. Companies can also issue equity shares, preference shares, debentures and accept deposits with RBI permission. Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.

 

OWNING PROPERTYPrivate Limited Company being an artificial person, can acquire, own, enjoy and alienate property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company – as long as the company is a going concern.

A COMPARISON OF ORGANISATION FORMATS

CRITERIAPRIVATE LIMITED COMPANYLIMITED LIABILITY PARTNERSHIPONE PERSON COMPANYPARTNERSHIPPROPRIETOR
Is Registration CompulsoryRequiredRequiredRequiredOptionalNo
Registration under the Act is mandatory to set up Private Limited CompanyRegistration under the Act is mandatory to set up LLPRegistration under the Act is mandatory to set up One Person Company
Both registered and unregistered partnerships are there but registered partnership preferred because of many advantagesRegistration is recommended to get the advantages of operating in a tradename
Is there a law specifically for thisYesYesYesYesNo
The Indian Companies Act 2013Limited Liability Partnership Act, 2008The Indian Companies Act 2013Indian Partnership Act, 1932Not Applicable
What is the minimum and maximum number of members2-20012 – Unlimited2-501
Requires minimum 2 and can have maximum 200 shareholdersMinimum 2 Designated Partners are required No bar on maximum number of partners: all partners need not be designated partnersOnly an individual Indian resident can be the shareholder: however there has to be one nominee alsoIt needs minimum 2 partners and can have maximum 50 partnersOnly one person being the business owner
Is it a separate Legal EntityYesYesYesNoNo
It can buy, hold, sell assets and contract liabilities in its' own nameIt can buy, hold, sell assets and contract liabilities in its' own nameIt can buy, hold, sell assets and contract liabilities in its' own nameIt has no existence which is separate or distinct from its' partnersIt has no identity separate from its' business owner
Do the members have protection from liability - is the liability limitedLimitedLimitedLimitedUnlimitedUnlimited
Liability of members is limited to the value of shares subscribedLiability of members is limited to the value of capital committed by partnersLiability of members is limited to the value of shares subscribedPartners are jointly and severally liable to pay the debts of the Partnership FirmProprietor is liable to pay the debts of the business
How are they taxed ModerrateHighModerateHighLow
Tax rate applicable for small companies is reduced to 22%With tax rate of 30% on business profit, tax benefits to partners is highTax rate applicable for small companies is reduced to 22%With tax rate of 30% on business profit, tax benefits to partners is highTaxed at par with individual
Is Audit mandatoryMandatoryDepends on circumstancesMandatoryDepends on circumstancesDepends on circumstances
Auditor must be appointed within the 30 days of incorporationApplicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 LakhAuditor must be appointed within the 30 days of incorporationStatutory audit not applicable. Tax audit may be applicable based on turnoverStatutory audit not applicable. Tax audit may be applicable based on turnover
How are legal compliances and formalitiesHighModerateModerateLowLow
Apart from Annual filings, it has to comply with various provision laid down, but less compared to public companyAnnual filing and few event based filings are necessaryApart from Annual filing, compliances are less compared to Private CompanySeparate ITR of partnership is filed, else there is no filing requirementSeparate ITR of partnership is filed, else there is no filing requirement
Can ownership be easily transferredRestrictedRestrictedOpenRestrictedOpen
Shares can be transferred only with the consent of other ShareholdersOwnership can be changed with consent of other partnersOne member can easily transfer his/her sharesOwnership can be changed with consent of other partnersOwner can easily sell/transfer the business

FAQs ON PRIVATE LIMITED COMPANY

A private limited company can have a minimum of 2 members and a maximum of 200 members. Members can also be directors in the company
Any individual can be a director provided 1)He/she is at least 18 years old 2) He/she has a DIN (Director Identification Number) or applies for a DIN with the required documents
There are 3 types of private limited companies 1) company limited by shares 2) company limited by guarantee 3) unlimited companies
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