HOW PRIVATE LIMITED IS BENEFICIAL AS COMPARED TO OPC REGISTRATION!!

DESCRIPTION

One Person Company

In the Companies Act 1956, a minimum of 2 directors and shareholders were mandatory to form a private limited company. However, with the introduction of the Companies Act 2013, a company can be formed with one director and one member. One Person Company is a company that has a separate existence but is owned by a sole member.

The concept brought in excessive possibilities for sole owners and individual capitalists who can take the benefits of limited liability and corporatization.

Private Limited Company

Private Limited Company is an entity that is altered from its Investors or Directors. The minimum number of shareholders is 2 and a maximum can increase up to 200 shareholders to incorporate a private limited company.  The shareholders could be ordinary persons or enterprises, including foreign companies.

Private companies can also be split into Private Limited Company Limited by Shares and Limited by guarantee. The liability of the company has limited i.e., the liability of the shareholders of the company is limited. The personal assets of the shareholders are not at risk in case of insolvency of the Company.

Resemblances between One Person Company and Private Limited Company

1. Both companies are incorporated under the Companies Act, 2013.
2. In the case of One Person Company the sole owner and in the case of Private Limited Company all the shareholders have limited liability to the amount of the value of their shares.
3. Both are separate legal entities from its member i.e., the personal assets of the members are not responsible for any loss suffered by the business.
4. The income of both entities is taxed with an equal rate according to the provisions of the Income Tax Act.
5. There is no restriction in carrying the objectives by OPC or private limited company as both the entities can carry out the same objectives.
6. Directors of both the form of business have to comply with the Event based compliances.

The difference amongst both the entities i.e. One Person Company and Private Limited Company.

1. In the case of One Person Company, the company name has to suffix (OPC) and in the case of a private limited company, the name of the company has to end with suffix Private Limited.
2. In the case of One Person Company, minimum and maximum 1 member is allowed while in case of a Private Limited Company the minimum numbers of members required are 2 and the maximum number of members can have is 200.
3. In a One Person Company, the minimum number of directors is 1 while in a Private Limited Company the minimum number of directors is 2. Both entities can have a maximum of 15.
4. One Person Company can be transformed into Private Limited Company after 2 years of its incorporation or when its income exceeds the threshold limit.

Reasons why private limited registration is beneficial as compared to OPC.

1. Funding is measured as the most important step for starting, preserving, and increasing business. Private Limited Company can increase its shares from different stockholders. Thus, a private limited company is the perfect type of business entity for growing businesses.
2. In today’s time customers, sellers and stockholders look for reliability in the businesses they deal with. When the reliability is not available it makes it tough to acquire reputed customers or acquire credit from dealers. In a private limited company, the evidence relating to the company is made available in a widely searchable database.
3. Savings and cooperation with foreign businesses play a substantial role in the excursion to become a multinational corporation. Thus incorporating a Private Limited Company can be productive. 
4. The person incorporating the One Person Company must be a natural person which means that it cannot be formed by any artificial person. Thus ownership is limited to only individuals and not businesses.
5. For the incorporation of Private Limited Company, there is no such limit hence this is an added advantage that Private Limited Company has over One Person Company.
6. One Person Company is to allow an individual to start his own business without the need to have a partner but, the technical and appropriate nominee have to be nominated. This creates complications, as the nominee has a choice to remove their consent and the possibilities of withdrawing are quite large in today’s growing competition.
7. Thereby it is making it challenging for the individual to find another nominee, acquire his/her approval, modify the memorandum and inform the registrar.

Conclusion

The misinterpretation between both the entities makes individuals go for an unsuitable choice which results in a loss. There are lots of benefits granted to private companies by way of amendments made in the Companies Act. One Person Company and Private Limited Companies have many similarities but Private Limited Company is the hassle-free incorporation and transferability. The taxation process is the same for both entities as there are no separate provisions made for One Person Company related to taxation. Private Limited Company has an advantage over OPC in many phases. Thus people should go for Private Limited Company because at a definite point in time they will have to transform their one-person company into a Private Limited Company.

Communication details: Email Id Swati@neusourcestartup.com and Phone Number 9540026175.

The NeuSource Startup Mind is the finest business startup consultant that offers various services of registration like Proprietorship Firm Registration, Partnership Firm Registration, LLP Registration, Company registration, GST Registration, Copyright Registration, ISO Registration Trademark registration and other FSSAI License etc.

Akash Rai

"Any time is a good time to start a company.” Neusource indulge in providing business consultancy services which help startups to accomplish their desired results as a TAJ EXPRESS. If you’re passionate about something and you work hard, then neusource is the right choice for you.