Comparison between One Person Company & Private Limited Company

Comparison between One Person Company & Private Limited Company

Small business Enterprises which are owned by a single Entrepreneur led to the introduction of One Person Company. Every firm e.g. LLP, Private Limited Company needs a minimum of two members to start a business; however, for OPC, it allows a single person to own and manage the business. If any individual is looking forwards to starting a business with an unregistered Proprietorship, then, a One Person Company is the best option to avail.

Factors One Person Company(OPC) Private Limited Company
Cost of Registration The Cost of an OPC is lesser than registering a Private Limited Company, with Hire CA you can get your OPC registered for Rs. 13,499/- only Cost of Incorporating a Private Limited Company with Hire CA is Rs. 12,999/- only
Number of People needed for Incorporation Incorporating an OPC needs a Director & a Nominee director which means two members but the one person can act as both the Nominee and Director. Maximum 15 Directors. Registering a Private Limited Company requires a minimum of two members and the maximum number of members can exceed upto 200.
Board of Directors Since there is only one working authority in the Company the concept of Board Meeting doesn't exist in an OPC. In a Private Limited Company it is mandatory to conduct Board Meetings which will comprise minimum two directors to a maximum of seven directors.
Shareholding The total amount(100%) of share is held by only one individual in an OPC. Minimum two shareholders are needed for a Private Limited Company hence, 100% share is not held by a single person.
NRI & Foreign Nationals Foreign Nationals and NRI's are not applicable for operating an OPC in India A Private Limited Company can have a Foreigner/NRI as a shareholder in the Company.
Required Compliances The Compliance requirements are same for OPC and Private Limited Company. It needs to file the Annual Returns with MCA and the Income Tax Returns. It is important to get the Account audited each year. The Compliance requirements are same for OPC and Private Limited Company. It needs to file the Annual Returns with MCA and the Income Tax Returns. It is important to get the Account audited each year.
Limitations According to the Companies Act, 2013 it is mandatory to convert an OPC to a Private Limited Company, if the annual sales turnover exceeds Rs. 2 crore and the Paid-up Capital exceeds Rs. 50 Lakhs. A Private Limited Company is a recommended form of business and do not posses such limitations of Conversion.
Post Incorporation Since it is a new form of business introduced by the Government it is at times difficult to obtain the licenses and registration and other post incorporation filings. Private Limited Company is the oldest form of business hence it is easy to carry on with the post incorporation filings of the Company

Conclusion: One Person Company is a miniature form of a Private Limited Company with major restrictions and limitations. It doesn't allow foreign promoters and it is also mandatory to be converted to a Private Limited Company after certain conditions are met. Hence Hire CA always recommends to Incorporate a Private limited Companyinstead of an OPC for a long term successful business.


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