OPC and Private Limited Company are two different business structures governed by the Companies Act. The concept of One Person Company encourages single and enthusiastic entrepreneurs to operate own venture. However, Private Limited Company requires two persons to incorporate the company.
Do you want to start a new business but have confusion as to what structure of company you should choose? This article might help you to ease your decision.
What is the meaning of OPC and Pvt Ltd Co.?
One Person Company means a Company which has only one person as its member. An OPC is effectively a company that has only one shareholder as its member.
A Private Limited Company is the form of the company where minimum two members are required and maximum number of members can be 200. The liability of the members of a Private Limited Company is limited to the amount of shares held by them.
Comparison between OPC and Private Limited Company
There are few similarities as well as a few differences between the OPC and Pvt. Ltd. Co. Let us discuss both here for your better understanding.
Similarities Between OPC and Pvt. Ltd. Co.
Separate Legal Entity: Both of them have separate legal entity. That means OPC or Private Ltd Co. is treated as a different individual in the eyes of law.
Benefits on taxes: To the both types of business structures tax benefits are given. The tax benefits would be 25% from the profits.
Limited Liability: In case of OPC the Sole owner and in case of Pvt. Ltd. Co. the shareholders have limited liability to the extent of their shares.
Registration Process: Both the companies are required to be registered with the Ministry of Corporate Affairs.
An OPC Has No requirement for minimum share capital. If capital exceeds 50 lakhs, OPC gets converted to Pvt. Ltd. & is suitable for Individuals whose capital requirements are 50 lakhs and turnover is less than 2 Crores.
One Person Company and Private Limited Company has a lot of similarities yet they both are different in many of its characteristics. If you are one person who wants to start a business One Person Company is definitely for you as the concept of One Person Company (OPC) was introduced with an objective to encourage single and enthusiastic entrepreneurs to operate own venture. While in case you are more than one persons who wish to start the business together than Private Limited Company is for you.
