Before discussing the difference between a private limited company (Pvt ltd) and a one-person company(OPC), we should first understand what a Pvt ltd company and OPC company is.

A Private Company can be described as a company or firm that is created with the involvement of members or shareholders from a minimum range of two to a maximum range of up to 200. It is a non-government organisation, where it does not offer or trade its shares to the public stock exchanges but owns and trades its private stock.

One Person Company describes a single-member commitment to run the whole company as a shareholder or a member. It is an integrated company where only one person has the power to run the business or company, even NRIs who have the authorization can run the company from a particular area and have a sole benefit from it.

Private Limited Company vs One Person Company

There are various kinds of information one should learn on Private and one-person companies,

• Cost of Enrollment: There are differences between a Private Company and One Person Company, it reveals at the time of registration. The cost while registering One Person company is cheaper than that of Private Company registration. But after checking up with the details, the difference between these two companies is not high to each other.)

• Share Holder: In the stake of ShareHolder, the two companies have rules, the One Person Company should have sole shareholder or member or proprietorship. But, a Private Company should have members starting in between two to 200.

• Participations of Foreign Nations: For growing up companies or businesses, foreign nation participation plays an important part in the differentiation based on rules and regulations. The Non-residential Indians or Overseas Indians can take part in the ownership of a One-Person Company whereas, in a Private company, FDI or Foreign Direct Investors can take a part in full engagement into it.

• Ownership Transfer Ability: Ownership Transfer Ability is only owned by a Private Company, but there are no rules exits of transferring the ownership available in a One-Person Company.

• Representation of Board Meeting: One-Person Company can help board meetings in a gap of 90 days, but in the case of a Private Company each board meeting should be held in a gap of 120 days.

• The number of Directors or Partners: There are differences between the number of directors or Partners, a One-Person company should have only one director or partner whereas a Private company can have several directors or partners between 2 to 15.

Quick Comparison Table

Why Choose Private Limited Company?

When we go through the various types while registering preferred firms or companies, there are different laws or rules and regulations applied in the Indian law section Act. So, each firm comes up with a registry. When we come up while companies with the registry for Private Limited, the things one need to follow are:

• The types that exist are Proprietorship Firm, One-Person Company, Private Company, Limited Liability Partnership, Partnership Firm, Proprietorship Firm.

• When it comes to comparison with Private companies, Limited liability companies require more compliance, but LLPs have fewer rules to follow. OPC is suitable for business owners, but the tax rate is high. Both partnerships and sole proprietorships are easy to form, but with unlimited liability.

Rules and Regulations for Private Limited Company

There are many compliances present while coming up with Private Companies rules and regulations, while they are discussed below:

• While registering into a Private Limited Company, one should undergo the framework of Companies Act 2013, which has been formed under a legal collaboration and every company needs to undergo it. It includes the various rules where the audit, financial year amount report, management report, etc.

• FDI involvement in Private Limited Sector comes with many instructions when foreign members are going to involve themselves in investing in the preferred company. FDI needs to undergo gaining permission from the Department of Industrial Policy and Promotions and Ministry of Commerce and Industry, there is also a circular in FDI established in the year 2014, for more information. First, FDI needs to check up with FDI prohibition rules, FDI automatic rules, and then after checking with these two if their criteria match then they are shifted to an approval route through which one can collaborate with Private Limited Company. 

Prohibition for FDI: There are few companies, where Foreign Direct Investors cannot enter are

• Casino Industry.

• Chit Funds

• Tobacco, cigars, etc industry or indirect involvement into this industry.

• Nuclear or Atomic Industry.

• Business in the Lottery Industry.

Approved for FDI: Approved path for the FDI to invest or to start up with the companies are

• Print Media.

• Online e-commerce.

• Petroleum, LNG, natural gas.

• Broadcasting.

• Operation of Satellite, etc.

Advantages of One-Person Company

If you have One Person Company, you can register one company as a sole owner or member. In the various surveys, one thing has been confirmed that One- Person Company is more reliable than that of other types. In terms of the long run, the company comes with various kinds of advantages:

• The One Person Company comes with a low liability, which means the creditor invests less amount on them. So there is a low risk where the personal property is safe from creditors of the business.

• OPCs are registered under the Companies Act which enjoys the same privileges as companies listed as limited liability companies.

• While an OPC must get its accounts audited and file required annual returns, the possibility of getting signed by a single director makes the work easier, rather than the signature of different directors.

Similarities between One Person Company and Private Limited Company

There are similarities present between OPC and Private Companies, they are as follows:

• Advantages in Tax payments, both companies receive a 25% tax benefit from their profits.

• The registration price for both companies is nearly the same, and the processing time is the same.

• Separate Legal Entities are present when it comes to OPCs and Private Companies, which represents that both are individuals in terms of law issues.

Conclusion

Dedication and seriousness are very important parts while starting the company as OPC or Pvt Ltd Company. So, the rules and regulations need to be followed for each of them, to continue with a successful firm. In a nutshell, both OPC and Pvt Ltd companies are equally able to form a firm.