AMM & ASSOCIATES

CHARTERED ACCOUNTANTS

Madan Mohan Arora

Chartered Accountant

Madhu Arora

Company Secretary

AMM & ASSOCIATES

CHARTERED ACCOUNTANTS

one person company registration

    Single Person Company Registration in India

    In India, a single-person company typically refers to either a sole proprietorship or a One Person Company (OPC), depending on an individual’s legal structure. A sole proprietorship is an informal business owned and operated by one person with no separate legal identity. 

    At the same time, an OPC is a formal entity introduced under the Companies Act 2013, allowing a single individual to establish a company with limited liability. This section explores both options, with a deeper focus on OPC registration, as it aligns with the concept of a “single company” under Indian corporate law.

    Sole Proprietorship vs. One-Person Company Registration

    • Sole Proprietorship: This is the simplest business form in India, requiring minimal registration. The owner and business are legally identical, meaning the individual is fully liable for debts and losses. It’s ideal for small-scale ventures like shops, freelancers, or consultants.
    • One Person Company (OPC): Introduced to encourage solo entrepreneurs, an OPC is a private limited company with one owner (called the member) and limited liability. It’s a hybrid between a proprietorship and a company, offering legal separation between the owner’s personal and business assets.

    For a “single company” in India, the OPC is the formal choice under the Ministry of Corporate Affairs (MCA). At the same time, sole proprietorships operate under more straightforward regulations. The choice depends on liability, scale, and willingness to comply.

    Why Register a Single Company in India?

    For a sole proprietorship, registration isn’t mandatory. Still, it is practical for tax compliance (e.g., GST registration) and credibility (e.g., opening a business bank account). For an OPC, registration is a legal requirement under the Companies Act, offering benefits like:

    1. Limited Liability: Personal assets are protected from business debts.
    2. Perpetual Succession: The company continues to exist even if the owner dies, with a nominee stepping in.
    3. Credibility: Clients and banks often view an OPC as more professional than an unregistered proprietorship.

    Both structures enable tax filings and access to government schemes. Still, an OPC provides a corporate shield that a proprietorship lacks.

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    Registering a Sole Proprietorship in India

    While not a “company” legally, a sole proprietorship is an everyday single-person business. The process is:

    1. Choose a Business Name: No formal approval is needed unless trademarked.
    2. Register for Taxes: Obtain a GSTIN (if annual turnover exceeds ₹20 lakh for services or ₹40 lakh for goods) or a PAN for income tax.
    3. Get Licenses: Apply for trade-specific permits (e.g., FSSAI for food businesses) via local authorities or online portals like the Udyam Registration for MSMEs (optional but beneficial).
    4. Open a Bank Account: Open a current account using registration documents (e.g., GST or Udyam certificates).

    This process is informal, often completed in days, and suits small businesses with low risk.

    Registering a One Person Company Process in India

    An OPC is a formal company under the MCA; its registration is more structured. Here’s the step-by-step process as of March 20, 2025:

    1.Obtain a Digital Signature Certificate (DSC):

    • The sole member (owner) needs a DSC for electronic filing.

    2.Apply for a Director Identification Number (DIN):

    • The owner, who also acts as the director, requires a DIN.
    • This can be applied during the incorporation process.

    3.Select and Reserve a Company Name:

    • Choose a unique name ending with “OPC Private Limited” (e.g., “ABC Trading OPC Pvt Ltd”).
    • Check availability on the MCA website and submit up to two name options via the RUN (Reserve Unique Name) service or directly in SPICe+.
    • The MCA approves the name within 2-3 days if it complies with naming guidelines (e.g., no trademarks or offensive terms).

    4.Prepare Legal Documents:

    • Memorandum of Association (MoA): Defines the company’s objectives and scope.
    • Articles of Association (AoA): Outlines internal rules and operations.
    • These are filed electronically via the SPICe+ form.

    5.File Incorporation Application (SPICe+):

    • Use the online form of MCA’s SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus).
    • Submit:
    • DSC and DIN details.
    • Approved name.
    • MoA and AoA.
    • Proof of registered office (e.g., rent agreement, utility bill).
    • Nominee details (an OPC requires a nominee to take over if the owner is incapacitated; include their consent and ID proof).
    • Declaration of compliance by the owner.

    6.Receive Certificate of Incorporation:

    • Once approved (typically within 7-14 days), the MCA issues a Certificate of Incorporation and a Corporate Identity Number (CIN), PAN, and TAN for the company.
    • The OPC is now legally recognized.

    Post-Registration Requirements for OPC

    • Annual Compliance: File financial statements and annual returns with the MCA (Form AOC-4 and MGT-7A).
    • Audit: Mandatory if turnover exceeds ₹2 crore or capital exceeds ₹50 lakh.
    • Nominee: Update nominee details if needed.

    Key Considerations Single Person Company Registration

    • Sole Proprietorship: Offers simplicity but unlimited liability—personal assets are at risk. Taxed as personal income under the Income Tax Act.
    • OPC: Limits liability but involves compliance costs (e.g., ₹10,000-₹20,000 annually for filings). Taxed at corporate rates (around 22%-25% as of 2025), with additional taxes on dividends if profits are withdrawn.
    An OPC can’t have more than one member or convert to a public company. Still, it can become a private limited company if it grows beyond certain thresholds (e.g., ₹2 crore turnover or ₹50 lakh paid-up capital for two consecutive years).

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