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One Person Company Features, Tax and Compliance

Posted by swarit on June 5th, 2020

One person company is a type of company that is owned and managed by only one individual. He is the sole owner of the business and all the business activities are undertaken by him. Acquiring one person company registration must be the first step in the company incorporation process. The business owner who intends to start a one person company must obtain a certificate called certificate of incorporation.

Features of One Person Company

One person company has certain characteristics that distinguishes it from other types of companies. 

  • The minimum share capital of a one person company must be Rs. 1 lakh.
  • The director of the company must appoint a nominee.
  • There is only one individual in a one person company, who is both the shareholder and director.
  • Filing a cash flow is not mandatory in case of a one person company.
  • Lesser compliances
  • Lesser fees for registration
  • No requirement for minimum requirement
  • Complete control over the business
  • Continuous Existence
  • Easy company set up
  • Limited liability

Benefits of One Person Company

One Person Company Registration Process

The One Person Company Registration Process has certain steps that is followed by individuals that want to establish a one person company.

  • Filing an application of Digital Signature Certificate: A Digital Certificate is a digital key that is issued by the concerned authority for the purpose of validating and certifying an individual’s identity. These certificates make use of public key encryptions to create signatures. It is mandatory for the company owner to obtain a digital certificate.
  • Company name approval through RUN: The company owner must get the company name approval as that is going to serve as the company’s identity. RUN is a service offered by the Ministry of Corporate Affairs (MCA)
  • Filing INC -32 form or Spice form: The submission of the INC form must be done by submitting certain documents which are mentioned as below:
  • Obtain certificate of incorporation: The certificate of incorporation is received by the business owner after all the forms ad documents are analyzed and evaluated. After receiving the certificate, the business activities can be started.
  • Memorandum of Association (MOA) and Articles of Association (AOA) of the company that mentions the important details of the company
  • Certified affidavit copy of the director as well as subscriber
  • A Non objection certificate (NOC) from the landlord and rent agreement in case if the property is located in a rented office
  • Proof of ownership in case the property is owned
  • Utility bill that could be in any form. It could be electricity bill, telephone bill of the office address that is registered
  • Identity proof of the applicant who is the owner. The proof could be in the form of PAN Card, Driving License
  1. PAN card copy of the applicant,
  2. Voter card copy or passport or driving license,
  3. A photograph of the applicant that is passport size is mandatory,
  4. A latest and updated bank statement or telephone bill,
  5. Memorandum of Association and Articles of Association of the company,
  6. An original document of sale deed or property deed (in case the property is owned by the applicant and is registered in his name),
  7. A Copy of Rent Agreement/document,
  8. A No-Objection Certificate (NOC) from the property owner in case the property is rented,
  9. Other significant documents as required by the authority.

Documents required for One Person Company

One Person Company Compliances

A one person company must maintain certain compliances according to the Income tax act and companies act. One of the major compliances that a one person company must abide by is filing of income tax return

Tax implications on One Person Company

The percentage of tax that the owner of OPC must pay is 30%. This number is similar to what a private limited company must pay to the tax authority. The tax includes 2% education cess and 1% secondary higher education cess. Moreover, a surcharge of 5% is levied if the turnover exceeds Rs Crores.

S NO.

 

SECTION

COMPLIANCE

1

MBP-1

184(1)

The director of the company in the First Meeting of the company with the Board of Director will disclose his interest in other entities and this must take place every Financial Year.

2

DIR-8

164(2)

The director of the company must file the Company disclosure of non-disqualification at the end of every Financial Year.

3

MGT-7

92

With regards to annual returns, One Person Company (OPC) must file its Annual Return within 60 days of entry of ordinary resolution. The annual return will be paid for the period starting from 1st April to 31st March.

4

AOC-4

137

With regards to Financial Statements, the company is required to file its Balance Sheet along with the statement of Profit and Loss Account and Directors ‘Report in this form.

Attachments that must be included are-

  • Balance Sheet
  • Statement of Profit & Loss Account
  • Directors’ Report
  • Auditors’ Report and Notice of AGM.

5

According to the latest notification issued by the Ministry of Corporate Affairs or mentioned by any of the acts.

Conclusion

Starting a company is not an impossible process anymore because of all the process mentioned step by step by the authority. If the steps are followed in a proper manner, individuals can obtain Public limited Company Registration certificate and start their business within a few days of registration.

Also See: Company Registration, Telephone Bill, Rent Agreement, Registration Process, Company, Certificate, Owner

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