unilexconsultants.comStarting a business is an exciting endeavor, and in recent years, the One Person Company (OPC) model has become increasingly popular among entrepreneurs. Maintaining OPC compliance is necessary, however, to make sure your company runs efficiently and stays in a good position with the government.
The OPC model is attractive due to its simplicity, limited liability protection, and ease of management. However, like with any business structure, it has particular compliance requirements that must be consistently fulfilled.
This blog will help you through the step-by-step process of ensuring your OPC Compliance is up-to-date, making the journey easier and less stressful.
What is a One-Person Company (OPC)?
Let’s define a one-person company before we discuss OPC compliance. A single person can run a business as a corporation with an OPC, a special kind of corporate structure made possible by the Companies Act of 2013. The primary benefit is that the company’s limited liability protects the owner’s assets from business debts.
Understanding OPC Compliance
It is crucial to adhere to a planned procedure that comprises several crucial compliance procedures in order to guarantee complete compliance with legal requirements and prevent fines or closure. Your OPC can stay legally compliant and remain clear of any financial or legal problems by following the following rules.
Step 1: Appointment of a Company Secretary (if necessary)
The size of an organization determines whether an OPC has to hire a company secretary. A qualified company secretary may need to be appointed if your OPC hits a specific turnover or capital criteria. Smaller OPCs can still benefit from using an expert to ensure proper OPC Compliance, even though they are not obligated to.
Step 2: Maintain Statutory Records
Keeping correct legal records is one of the most important one person company compliances.
- Members’ Register
- Directors’ Register
- Board meeting minutes
- Register for Share Transfers
These records need to be kept up to date and maintained regularly to guarantee openness and prevent legal issues.
Step 3: Submitting an Annual Return for One Person Company
The annual return for a one person company is a crucial component of OPC compliance. Every OPC is required to file an annual return with the Registrar of Companies (ROC) in the appropriate format.
Important information such as the company’s financial status, the number of shareholders, and any modifications to the capital structure or management are all included in OPC’s annual return.
This return must be filed within 60 days of the Annual General Meeting (AGM), and failure to do so can result in high penalties.
Step 4: Annual Filing of OPC- Financial Statements
Financial statements must be compiled and submitted to the ROC by all OPCs. The following documents are included in the OPC Annual Filing:
- The balance sheet
- Statement of Profit and Loss
- Statement of Cash Flow (if applicable)
- Report of Directors
The OPC Director and the company secretary, if applicable, must sign these documents. The financial statements must be submitted within 30 days following the AGM. Maintaining the integrity of your OPC and avoiding penalties are two benefits of making sure your submission is submitted on time.
Read Also- Closing of One Person Company
Step 5: Director’s Report and AGM
The director’s report is an essential component of your OPC’s compliance. It needs to be prepared and presented to the members during the annual general meeting (AGM). The report offers a thorough evaluation of the business’s performance, emphasizing its most notable achievements, solid financial standing, and promising future.
An AGM is required for OPCs with revenue of more than Rs. 2 crore. Even though OPCs with lower turnover might not be required to hold an AGM, the director still needs to compile the necessary financial statements and documents for submission to the ROC.
Step 6: Tax Compliance and Filing of Income Tax Returns
OPCs must abide by the same tax laws as any other business. You will be asked to comply to:
- Income Tax Filing: Regardless of profit or loss, file income tax returns annually.
- GST Returns: Your OPC must submit monthly or quarterly GST returns if it is registered for GST.
- TDS Filing: If necessary, deduct taxes at the source and submit TDS returns.
It is essential to follow through with tax regulations in order to prevent penalties and other legal consequences.
Step 7: Statutory Audit
If an OPC’s turnover in a fiscal year is above Rs. 2 crore, a statutory audit is required. It is, however, advisable to have an audit to make sure your financial records are correct and in compliance with the law, even if your turnover is below this amount.
Together with the auditor’s report, the financial statements must be delivered to the ROC.
Final Words
Although managing OPC Compliance might be difficult, following these regulations guarantees that your company runs efficiently and maintains its legal status. Unilex is here to make things easier for business owners feeling stressed by the process.
From completing the annual filing of OPC to submitting your annual return for a one person company, our knowledgeable staff can assist you with all facets of OPC Compliance.
Let Unilex handle the complex compliance issues so you can focus on growing your business. Get in touch with us right now to eliminate any concerns about OPC Compliance!
FAQs
1. What are the compliances for OPC?
Ans. OPCs are required to file yearly returns, attend meetings, and adhere to income tax and GST laws, if any. Directors hold the responsibility of guaranteeing adherence to the Companies Act of 2013.
2. What is a necessary step in setting up an OPC?
Ans. The first step is to choose a distinctive name for the business, obtain a Digital Signature Certificate (DSC), and assign the only shareholder a Director Identification Number (DIN).
3. What is the annual filing of a one-person company?
Ans. Every year, OPCs have 180 days from the end of the fiscal year to submit Form MGT-7 (annual return) and Form AOC-4 (financial statement) to the Registrar of Companies (RoC).
4. What is a one person company audit’s limit?
Ans. The OPC’s ability to register for GST is dependent on its turnover. Although an OPC’s finances must be audited every year, it is exempt from the audit obligation if its turnover is less than INR 2 crores.
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