Practical illustrations on limited liability and profit sharing of OPC

662 votes

1. Ideally, you should buy from traders registered under TIN/VAT. This is crucial for accounting purposes and since you will have to pay through cheque or banking channel and not through cash beyond a limit.
2. Manufacturing will require factory license and all other registrations (the landscape will change after GST)
3.A whole time Director can always receive remuneration.
4. Profits will be paid as dividends
5. A company is a legal entity having a separate existence. You tax liability will be as an individual shareholder.

Your queries are fundamental questions and need detailed examination based on your actual business model. You may also consider being a startup. Do share more information fort a detailed opinion.

Advocate Joydeep Nath LawRato

966 votes

The Companies Act, 2013 lists out a number of details for a one person company. The questions sought by you require a detailed analysis. To begin with in case you want to set up a partnership you need atleast two persons whereas under OPC as the name suggests one member and may have one director. Responses to other questions can only be given after further consultation

Advocate Srishti Saxena LawRato

733 votes

To begin with too many questions
I wish to start a One Person Co. (OPC) to buy and sell shirts/footwear/wrist watches etc as a small business. My questions are:
1. Can I trade in those goods only which I brought from TIN/VAT registered dealers/suppliers? - You are advised not to as it involves propriety and without being a dealer you may be prosecuted for the same.
Or I may sell goods bought from local/rural manufacturers/ flea market who do not have TIN no.?- This you can
2. Can I start manufacturing garments/ purses/ shoes without factory license/manufacturing license/Excise registration, and sell them online on AMAZON/FLIPCART etc?- You should not do this as well. You will land in a tax soup. It doesnt cost you much so go ahead with proper footing
3. If I start an OPC as small business, please illustrate and explain how I, as Director of the co.- OPC begins with a director you will be at behest of the company but company will have a different identity than yours with a seal and name
actually get money/be paid by the company? -Which company are you referring to? This will be created in your name. You will have to invest initially to get benefitted
4. Can I withdraw all �profits� for �personal use�?- yes you can but being in the tax net. Your profit as a director will be different than that of a company. Both subject to different incidences of tax
5. Please illustrate how beneficial will be limited liability protection in the above scenario in small business.- it is beneficial but I will not be able to illustrate in limited context
6. How tax liabilities of my company and myself are are calculated separately?- Do you have aspirations of doing it all on your own? What will professional do for that matter advocate. yes they are calculated differently
7. What if my business fails and I choose to wind up the company? There is a process for winding up
Or I choose later to do business of different nature? -You will have to inform MCA in proper form for change of business and then you can do that if that is not covered in MOA
For more hire and then seek better advice. We have a team of lawyers, CA and CS to assist you but yes of-course there will be professional costs.
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Advoacte Amit Kumar Singh LawRato