The first and foremost reason is that a Separate legal entity is created in the eyes of the law, which is capable of doing almost everything a natural person can do.
An OPC can raise funds from others like venture capital, Angel investors, financial institutions, etc., thus graduating itself to a private limited company.
The advantage of limited liability is certainly a desire of any start-up. It encourages you to take additional risk with limited liability. (It means even if you fail, your liability will only be restricted to the value of your share capital, i.e. your personal assets are safe).
OPC need not bother too much about the compliances like other forms of companies. Therefore, entrepreneurs can concentrate on their core functional area.
An OPC can avail various benefits available to the SSI units. E.g. Loans at a lower rate of Interest, funding without any security from banks up to a certain limit, various benefits under Foreign Trade Policy and many others as well. These benefits can really provide you with early assistance, which is a boon for any business in the initial years.
You being the only owner give you full control over the entity. Further, faster decision making will also help your business grow effectively.
Read More: Advantages and Disadvantages of One Person company
If OPC applies for the loan, then your credit rating is not relevant, a rating of OPC is relevant. In other words, if you have a bad credit rating, then also you can easily get funds if the rating is OPC is as per norms.
Being registered as OPC, any remuneration paid to the director will be allowed as a deduction under income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.
Read More: One Person Company Taxation
Since all start-ups are generally SSI’s, they are all covered under Micro, Small and Medium Enterprises Development Act, 2006. If any buyer or service receiver pays you after a specified period then you are also entitled to the interest which is three times the bank rate.
Any business which runs in the form of a company always enjoys an increased trust and prestige than any other form of business.
“Existing proprietors can also convert themselves into the One Person Company (OPC) or any other company as per the requirements and can avail the above-mentioned benefits.”
Click here for Incorporation of OPC