If you have the right skills to start a business, then it is wise to have your own entity. An example is the “Digital Marketing Agency”. Why wait for it then? Starting One Person Company is the way to go!!
Read my article: How to Become a Social Media Consultant
A legal entity, a.k.a company in your name has many benefits:
1) You can pursue your dreams, showcase your creativity and reap what you sow
2) You are your own boss with flexible work timings. Perfect opportunity to maintain work/life balance.
3) You bring credibility towards your clients
4) Lastly, who knows you can be the next Bill Gates or Mark Zuckerberg.
In India, ever since what I may call “Jio Revolution”, data price have gone down drastically. Internet is now accessible by all strata of people in the society. And what more, internet and smartphones have started to penetrate remotest parts of the country. You do not need to migrate to Class A cities to start your business. Sitting at your place of convenience, you can bring your skills online and start making money, be it startups in agriculture, weaving, culinary interests, fashion designing, teaching or web design. E-Commerce sites like https://khumanthem.in/ and https://www.zizira.com/ are testimonials.
The Government of India is well aware of the developments and has been encouraging entrepreneurs to start business of their own. Section 2(62) of the Companies Act, 2013 has made a game-changer provision by introducing One Person Company (OPC) concept. Countries like USA, China, UK, Singapore, and Australia already have similar provisions. In OPC, any person who on his own can run a venture is allowed to create a single person economic entity. It is a form of private limited company. However, unlike normal private limited companies where you need minimum of two members, there can be only one member in a OPC who can act as shareholder as well as director. If required, the owner of OPC can duly appoint director(s). The minimum and maximum number of directors in an OPC can be one and fifteen respectively.
OPC has obvious advantages over another two popular form of small businesses in India – Sole proprietorship firm and Partnership firm. One of the biggest advantages of OPC is that it offers limited liability to its sole shareholder. Liability of the owner lies with only the invested capital in the OPC. His/her personal property or assets are outside purview of OPC in case of disputes.
OPC has lesser compliance compared to Private Limited Company, Public Limited Company or LLP. The owner can focus more on his business goals.
OPC can also avail various benefits available to small scale industries like funding up to a certain limit from banks without collateral, loans at lower ROI etc.
As OPC enjoys perpetual status, the company continues to run even when the member dies or becomes disabled. That is why, OPC compulsorily mandates appointment of a nominee. It is to be noted that one person can be member or nominee of any one OPC only.
Only a natural person who is an Indian citizen, a resident of India and a major shall be eligible to act as a member and nominee of an OPC.
Step1: Apply for Digital Signature Certificate (DSC)
The owner of OPC must obtain digital signature certificate as a first step. The documentations required for this purpose are:
Applicants can directly approach Certifying Authorities (CAs) with original supporting documents, and self-attested copies to obtain DSC.
The MCA portal has a list of licensed CAs along with their contact information:
Step2: Director Identification Number (DIN):
The member must seek for DIN through eForm SPICe by attaching proof of Identity and address. DIN would be allocated after approval of the form.
Step3: Name Approval
In order to have a formal identity of your OPC, you have to select a unique name for your company. The name has to be aproved by MCA.
You can apply for your name registration either via SPICe form (INC-32) – Simplified Proforma for Incorporating Company electronically (SPICe) or by using RUN (Reserve Unique Name) Web service of MCA.
Note that after registration, you have to use word “(OPC) Private Limited” in the company name.
Step4: Memorandum of Association (MoA) and Articles of the Association (AoA)
MoA and AoA are the constitution of your OPC. These documents must be carefully drafted since it will contain all the information, rules and regulations pertaining to your entity.
Ministry of Corporate Affairs has introduced eMOA and eAOA for framing the MOA and AOA of a company easily.
Step5: Ownership Proof of Registered Office
Proof of ownership or NOC/Rent agreement of the Registered office of your OPC will be required.
Step6: KYC Documents:
Since you are the only member, you need to keep all your self-attested KYC documents handy.
All these documents and forms will be uploaded to the MCA site for approval. You must also nominate the name of the nominee. Consent of the nominee in the prescribed form INC-3 must be obtained and attached to the registration forms accompanied by his/her PAN, residential address proof and proof of identity.
MCA portal will prompt for uploading of PAN/TAN application. You can download form 49A and 49B, sign them digitally and upload again.
All forms can be downloaded from MCA site: http://www.mca.gov.in/MinistryV2/companyformsdownload.html
After validation, the Registrar of Companies (ROC) will issue a Certificate of Incorporation. You can now formally start your business. The whole process might take 2-3 weeks.
Lastly, you need to open a current account in any bank to manage your finances. You can check the list of documents required by banks in their websites.
Generally, we do not personally apply for a company’s registration. You can approach any local Chartered Accountant or any online service providers like https://www.indiafilings.com/ or https://cleartax.in for a nominal fee and get your OPC registered without having to go through any hassles.
OPC can be converted into private or public company voluntarily or under compulsion.
Voluntary conversion is permitted after two years is completed from the date of incorporation of the OPC. However, in case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then it is obligatory for the OPC to convert itself into private or public company. RoC (Registrar of Companies) has to be intimated via Form INC-5 within sixty days of exceeding threshold limits.
Form INC-6 is required to be filed in order to convert OPC into private/public company. Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.
So, my friends, why the wait? You can start your own venture today!! Do let me know about your new ventures in the comment box!!!
I will write on the other types of company you can register – Partnership, Sole Proprietorship, LLP and Private Limited in later blogs.
Stay blessed and best of luck!
FAQ on MCA site: http://www.mca.gov.in/MinistryV2/onepersoncompany.html
FAQs On Digital Signature Certificate (DSC): http://www.mca.gov.in/MinistryV2/digitalsignaturecertificate.html
MCA RUN Service: http://www.mca.gov.in/MinistryV2/runServicerFAQ.html