What obstacles prevent a One-Person Company (OPC Pvt Ltd) from being established?

What obstacles prevent a One-Person Company (OPC Pvt Ltd) from being established?

Would you like to enlist a One-Man Organization? Be aware of the drawbacks.

One of the major drawbacks of registering a business is that one-person businesses are unable to incorporate or register another one-person business, and their nominees are unable to become nominees in another one-person business.

  1. B) The Company (Incorporation) Rules, 2014, Rule 6 (a) stipulates that a one person company cannot continue as such if its paid-up share capital exceeds Rs 50 lakh (fifty lakh rupees) and its average annual turnover exceeds Rs 2 crore (two crore rupees).

How does one determine the average annual turnover?

Determine an annual average turnover rate over three years.

OPC is unable to continue doing business if either of these conditions are met.

(2) A one-person company must become either a private company with at least two members and two directors or a public company with at least seven members and three directors within six months of having a paid-up share capital of more than fifty lakh rupees or ending its average annual turnover of more than two crore rupees.

In a one-person business, expansion is limited in many ways.

Any officer of a One-Person Company who breaks these rules faces a fine of ten thousand rupees and an additional one thousand rupees for each day they continue to break them.

Most people think that registering a one-person business is cheaper than registering a private limited company.However, this is not the case.In contrast to private limited companies, which require at least two people to register, one-person businesses require two people to register—the owner and the nominee.Stamp duty and fees will be affected by authorized capital amounts.Stamp duties must be paid by all businesses, regardless of whether they are OPCs or private limited companies.

In contrast to private businesses, OPC only requires one digital signature certificate per director.

  1. d) After registration, a person company has a lower compliance rate than a private limited company.However, the myth persists.The laws that govern a private limited company and a one-person company are identical.

Furthermore, a one-person business is required:

to submit an Income Tax Return (ITR) and an Annual Return (ROC) to the Registrar of Companies in order to have its actual accounting audited by a chartered accountant.

to submit its TDS returns and GST returns, among other things.

In terms of post-registration compliance, there is no difference.

Investors cannot be attracted to one-person businesses because they are unable to divide ownership or issue shares.A private limited company, on the other hand, can’t have more than 200 members.By offering shares, private limited companies can attract investors.A one-person business can only borrow money to fund its operations.A lender is more likely to lend money to a limited company than to a sole proprietorship.

One-person businesses are referred to as (OPC) Private Limited.Value actually decreases rather than increases when “OPC” is used.Low-potential businesses are frequently associated with the name OPC.A private limited company has a better reputation in the industry than a one-man business.

The registration, compliance, finance, expansion, and reputation disadvantages of one-person businesses were discussed.

It is suggested that you establish a private limited company rather than a one-person LLC due to the similar costs of registration and compliance.

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