Why shouldn't you choose One Person Company (OPC) structure for your startup?
Want to Start up? Confused which form of entity structure you need to choose? Is OPC better form to start off initially? I am sure these are the questions running in your mind now. Here is why you shouldn’t choose One Person Company (OPC) as the organisation structure when you want to register your startup.
We keep getting enquiries from new age entrepreneurs to register their company as a OPC, however we strongly discourage using OPC structure to start off, for multiple reasons which we will be discussing in this article.
To start off here is a quick snapshot of pros and cons of choosing OPC
Let us now get into the details of each point by looking at the disadvantages first.
|Not Attractive to investors and Restrictions on FDI||
|Complications in Conversion||
|Restriction on Issue of ESOPs||
|Higher Compliances Cost||
|Restrictions on Business||
However, it's not all gloomy if you still choose to start as an OPC, here are some of the advantages of OPC
|Easy to Get Loans||
Now considering that the cons over-weight the pros of starting your company as OPC, we recommend entrepreneurs to choose a regular private limited instead of OPC if you have ambitious growth plan for your business. It makes all the more sense when the cost of setting up and operating a private limited is almost the same as compared to an OPC.
If you still need further information about incorporation of company please click here to reach services tab or click here to know more about comparison between LLP and private limited structure, which will help you decide if you need to choose LLP over private limited company.