The modern-day economic scenario makes for a challenging terrain to navigate. The stock market is very volatile, and world politics is at such critical juncture, that no predictable large-scale investment can be a guaranteed success. All these scenarios involve one essential component, namely, wealth. Money rules over the roost in the current day and age, and to increase your monetary worth significantly, you need to make proper investments. However, even if you possess an excellent intellect and genuine business insight, there is the stumbling block of convincing investors to be part of your ambitious project. The One Person Company Registration procedure, modified in 2013, makes overcoming this obstacle significantly easier.
The One Person Company act set up in 2013, has given aspiring entrepreneurs a lifeline by introducing the concept of single-person ownership. Before the introduction of this law, a company needed at least two directors to establish itself officially. Even though this concept is comparatively new, the new generation of entrepreneurs has welcomed it with a new ray of hope. Know more about the One Man Company features in the next section.
One Person Company Features
The significant difference between a One Person Company and any other type of company is the existence of a single member who acts both a member and a director. Its salient features are as follows.
- There is a single member involved in the company, who acts as both member and director.
- Nomination for a succeeding director needs to be filed while registering the company.
- In case the annual turnover crosses the two crore INR mark three years down the line, the company has to convert itself into a private or public limited company.
- Like most conventional companies, they have to produce a financial statement to the Ministry of Corporate Affairs (MCA) after one fiscal year.
- It acts as an independent legal entity and can further their global branding, or purchase or sell assets under the company’s name.
It is also often confused with a sole proprietorship. However, there are a few distinct differences. Click here to know about these differences
- Firstly, the sole proprietor doesn’t exist as an independent legal entity, a privilege that the One Man Company enjoys without restriction.
- Secondly, the One Man Company has limited liability, as the establishment stands as a separate legal identity from its owner. The Sole proprietor is not exempt from his personal assets, becoming liabilities in case of liquidation.
- Registration with the MCA is not necessary for sole proprietors
- The income tax scheme is different for the two types of companies.
These unique features give rise to several benefits of opening a One Man Company. Read more about the advantages of a One Person Company in the next section.
Top Advantages of One Person Company
Many advantages of One Person Company stem from the unique features and rules imposed upon it. These advantages are listed below.
- The establishment itself acts as a legal entity, and hence can conduct all activities in its name, as the entrepreneur itself.
- There is a limited liability for the member itself, as it doesn’t involve his or her personal assets
- There are several alternatives for obtaining funding, including Banks, Financial individuals, and large-scale investors.
- The company is excluded from some compliances and formalities like Board meetings and General Body meetings.
- Members can be added to the company and enjoy the said facilities. However, they would not be registered as shareholders, and hence do not bump up the liability of the company.
- Selling a One Person Company is hassle-free, requiring less time, money, and documentation to complete the whole procedure.
- The company can seamlessly convert itself into a public or private sector company by employing an additional director.
It is quite evident that a One Person Company is very different from most other companies in the private or public sector. Therefore, it comes as no surprise; there are a few rules regarding naming such a company. Click here to know about the One Person Company Name Format.
Best-One Person Company Name Format
The One Person Company has to have the following name structure for it to be a valid business enterprise.
- First Name – This is your brand name, and is open to your choice. Conventionally, it’s your surname or brand name.
- Objective – It should typically denote your primary business, such as steel, or stockbrokers, etc.
- Finally, after the full name, One Person Company needs to be mentioned in brackets.
After deciding on a name and carefully planning out your business venture, the only thing left to set up your company is the One Person Company Registration. Know more details about the registration procedure in the next section.
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The best method for One Person Company Registration
The complete One Person Company registration process takes a few simple steps. However, some items are prerequisites to this process. Information regarding this is elaborated below.
- Identity proof of member.
- Address proof of member.
- Address proof of office space.
- Consent form of the nominee director.
- Articles of the association stating the laws of operation.
- Memorandum from the association undertaking the registration.
One Person Company Registration Fees
The success of a One Person Company lies in its affordability. Registration fees for individual company registration range between 5000 and 12000 Rupees in Indian currency.
After meeting these requirements, you are ready for registering a One Person Company. It is quickly completed by following the six simple steps.
- Apply for Digital Signature Certificate (DSC).
- Once approved, apply for Digital Identification Number (DIN) in a similar manner.
- Finally, apply for ratifying your name.
- Submit the required documents.
- Fill up all of the required forms with the MCA.
- Once everything is verified, a certificate of Incorporation will be issued.
Once the certificate is issued, you will be officially recognized as a One Person Company director and will be able to carry out all business transactions at ease.
In the current business culture focussing on start-ups, the One Person Company is an efficient initiative for kick-starting your business. We hope that his blog could help answer many of the doubts regarding such companies. Please leave a comment about your experiences with One Person Companies and how this blog could be improved.
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