The Companies Act, 2013, which was passed in India, established the One Person Company (OPC) business structure.
It is a business that only has one shareholder and member. The idea of OPC was established to support entrepreneurship and make it simpler for people to launch their own enterprises.
A sole proprietorship and a private limited company are both parts of the hybrid business structure known as an OPC.
Like a private limited company, it is a separate legal entity with limited liability and permanent succession.
This entity's flexibility and management simplicity are also features of a sole proprietorship.
For small firms and startups that desire to function as separate legal entities but have few owners or shareholders, OPC is an appropriate solution.
Without the assistance of any partners or additional shareholders, the solitary proprietor can own and run the business.
The owner must submit the proper paperwork to the Registrar of Companies in order to incorporate an OPC (ROC).
The Memorandum of Association, the Articles of Association, and other pertinent documents are among these.
When the ROC approves the paperwork, the OPC is incorporated and receives a Certificate of Incorporation.
Benefits of Annual Compliance for OPC
One-person company (OPC) compliance describes the rules that an OPC must follow to comply with the law. OPC compliances have a number of advantages, including
1. Protection from Legal Issues:
OPC compliances ensure that the company works legally and is safe from legal problems. Legal problems, penalties, and even the collapse of the business may result from non-compliance.
2. Improved Credibility:
OPC compliances boost a company's credibility, which can assist it in drawing in investors, clients, and suppliers. Building long-lasting connections requires an organization to be honest and reliable, which compliance provides.
3. Tax advantages:
By ensuring that the firm is paying the correct amount of taxes, OPC compliances can assist it in obtaining a number of tax advantages and incentives. There are various tax benefits associated with OPC compliance in India, including reduced tax rates, exemptions and deductions, the ability to carry forward losses, and presumed taxation. To take advantage of these tax benefits and prevent penalties and legal problems, OPCs must maintain timely compliance with all applicable tax laws and regulations.
4. Improved Access to Finance:
OPC compliances guarantee the accuracy and dependability of the company's financial statements, which can help it get financing from banks and other financial organizations.
5. Ease of Conduct:
Annual Compliance for OPC guarantee that the company is operating transparently and effectively, which can assist it in avoiding unwarranted delays and disagreements. As a result, conducting business may be made simpler and more effective.
What Makes Annual Compliance in OPC Important?
Each kind of business, even an OPC, must follow the annual compliance standards.
For the business and its owner, non-compliance with these standards may result in legal and financial problems.
The following are some justifications for why it is crucial to adhere to annual compliance in an OPC:
1. Legal compliance:
An Annual Compliance for OPC must abide by all laws and regulations that apply to it because it is a distinct legal entity. Penalties, fines, and legal problems for the business and its owner may result from failure to adhere to these rules.
2. Keep up good standing:
An OPC must adhere to the annual compliance requirements of the Registrar of Companies (ROC) and other regulatory bodies. As a result, the business may be able to win the respect of clients, partners, and financiers.
3. Prevent penalties and fines:
Breaking the rules for annual compliance can result in penalties and fines, which can be expensive for the business. While the owner is in charge of the company's compliance, these fines may also have an impact on their personal finances.
4. Access to funding:
Fulfilling annual compliance criteria may assist an OPC in obtaining money from investors, banks, and other financial organizations. Before providing finance or making an investment, these organizations frequently demand that businesses have a solid compliance history.
5. Avoid legal disputes:
Fulfilling the annual compliance obligations can assist an OPC in avoiding legal conflicts with stakeholders, such as shareholders, creditors, and employees. These disagreements may be time-consuming and expensive, and they may have an impact on the business's reputation and operations.
An OPC must submit its yearly financial statements and an annual return to the ROC, maintain its statutory registers and books of accounts, hold board meetings, and host an annual general meeting as part of its annual compliance obligations.
In order to avoid fines and legal troubles, it is crucial to make sure that these requirements are satisfied on time.
Process of Annual Compliances for OPC.
1. Conduct the Board Meeting
The Board of Directors must meet at least once every six months, with a minimum of 90 days elapsing between sessions, in accordance with Section 173 of the Companies Act of 2013. Hence, One Person Enterprise must hold a minimum of two board meetings each year.
2. Choosing an auditor
An auditor’s appointment is required for One Person Companies under Section 139 of the Companies Act. It must have a Chartered Accountant firm audit its financial records. The auditor will check the books of accounts and produce an audit report.
3. The annual return is filed
One-person businesses must file their yearly returns within 180 days of the end of the fiscal year. The following information must be included in the annual return's specifics: Directors and Business Shareholders, Within 180 days of the fiscal year's end, each OPC must file its Annual Return on Form MGT-7.
4. An Interest in Other Businesses Disclosure
At each fiscal year's first Board of Directors meeting, the OPC directors must disclose their ownership stakes in other companies on Form MBP-1.
5. KYC of the company's director
Every person who had a DIN as of the financial year's 31st March is obliged to complete Form DIR-3-KYC for that financial year by the deadline of 30 September of the next fiscal year.
6. Filing of Form DPT-3
The Form DPT-3 must be filed annually on or before June 30 in order to report deposits and information that was not a deposit as of March 31.
7. The Statutory register being prepared
The statutory registers must be kept up to date by a One Person Corporation, in accordance with Section 88 of the Companies Act of 2013.
OPC is expected to adhere to a number of Event-based compliances as well.
- Share transfer.
- Director appointment or resignation.
- Nominees or bank signatories have changed.
- Auditor changes.
Documents required for Annual Compliance with OPC
The following documents are necessary for an Indian one-person corporation (OPC) to maintain annual compliance:
1. Financial Statements:
It is necessary to compile the fiscal year's financial statements, including the balance sheet, profit and loss statement, and cash flow statement.
2. Auditor's Report:
If the OPC's annual revenue exceeds Rs. 1 crore, a chartered accountant must audit the financial statements and produce an auditor's report.
3. Registrar of Companies:
The OPC is required to produce and submit its yearly return (ROC). Information on the board of directors, shareholders, and share capital is included in the annual report.
4. Income Tax Return (ITR):
The OPC must submit its income tax return for the fiscal year using Form ITR-6 and, if required, the audited financial accounts. The Annual Compliance for OPC is required to detail all of its income, including business income, capital gains, and any other income obtained during the fiscal year, in the ITR. The OPC must also determine its overall tax obligation, accounting for any allowable credits or exemptions.
5. The necessary statutory registers:
The register of members, the register of directors, and the register of loans and Investments.
6. Board Meeting Minutes:
Creating and retaining the minutes from all board meetings held during the fiscal year is necessary.
7. Share Certificate:
The shareholder of the Annual Compliance for OPC shall be the recipient of the share certificate. The share certificate is an important document for shareholders since it serves as proof of their own in the firm and is frequently needed for various purposes, including share transfers, loan applications, and share sales.
The Companies Act of 2013 mandates that OPCs provide share certificates to their shareholders no later than 60 days following the date of establishment or share allocation. The shareholder's preference will determine whether physical or electronic share certificates are issued.
Challans must be kept on file for the payment of all applicable taxes, including income tax, GST, PF, ESI, and others.OPCs in India may need to pay a variety of taxes and levies on a regular basis, including professional tax, GST (Goods and Services Tax), and income tax. OPCs may use the government's e-payment site or accredited banks to generate challans electronically for these types of payments. To guarantee compliance with legal obligations, OPCs must maintain accurate records of all challans generated and payments received.
9. Additional Documents:
The incorporation certificate, articles of incorporation, memorandum of association, and any other pertinent documents are also necessary for yearly compliance.
It is significant to note that the documents needed for annual compliance may change based on the specific requirements of the OPC and the relevant laws and regulations. To ensure that it complies with all standards, it is advised that the OPC seek the advice of a professional, such as a chartered accountant or company secretary.
In a nutshell, An essential component of corporate governance in India is the Annual Compliance for OPC.
All OPCs are required by the Companies Act of 2013 and other relevant laws and regulations to abide by the annual compliance requirements.
The annual compliance ensures that the OPC maintains its legitimacy and legal standing while avoiding negative financial and legal repercussions.
The creation and submission of financial statements, yearly returns, income tax returns, the upkeep of statutory registers, and other documentation as required by the relevant laws and regulations are all included in OPC's annual compliance.
Dates for compliance are determined by events like the conclusion of the fiscal year, the Annual General Meeting (AGM), and the filing of an income tax return.
To ensure timely compliance and stay clear of any legal concerns, it is advised for OPCs to seek the advice of a professional, such as a chartered accountant or company secretary.
OPCs can continue to function as registered businesses with limited liability by meeting the annual compliance criteria.
This raises the OPC's credibility and aids in luring investors, clients, and vendors.
If the annual compliance standards are not met, the OPC's name may even be removed from the list of firms and subject to penalties and fines.
Hence, in order to preserve their legal standing and reputation, OPCs must guarantee fast and correct compliance.
So, to avoid any kind of discrepancy or any other mishappening, you can consult with the experts of ESPECIA.
Why choose Espeica for Annual Compliance for OPC
Together with regular tax and compliance services, we offer comprehensive financial outsourcing solutions, including virtual CFO, valuation, secretarial, and transaction consultancy services.
In order to improve governance and transparency in business operations, corporation, tax, and governance rules are evolving quickly.
Especia manages every facet of an organization's finance department operations so that business owners and organizations can concentrate on their primary skills.
The Benefit of Using Especia's OPC Annual Compliance Service
- A few advantages of Especia's Yearly Compliance with OPC include limited liability protection, independence, and more opportunities to raise money from financial sponsors.
- Especia may assist you in meeting your annual compliance duties by ensuring that all necessary paperwork is filed on time.
- By outsourcing your annual compliance requirements to Especia, you may reduce the possibility of errors and omissions, which can result in penalties and legal complications.
- It can be challenging for the OPC to manage numerous company operations per the complex corporate and tax regulations; therefore, it is advisable to work under the supervision of a professional like Especia to comprehend the rules and comply with them on time.