Difference Between OPC and Private Limited Company

Introduction 

A private Limited Company and OPC are two different types of business structure. Pvt Ltd Companies are suitable for large businesses and managed by multiple shareholders where OPC are more suitable for small businesses and managed by a single person. Both structures have different purposes and advantages which distinguish them from each other. Get the complete difference between OPC and Private Limited Company through this detailed blog. 

What is a Company? 

A Company is a legal entity formed by one or more individuals to engage in and operate a business. A company is majorly divided into two parts such as a Private Limited Company and a Public Limited Company. 

A private limited company is a business company established by private stakeholders. A private limited Company Registration comes under Companies Act, 2013 and the objective of the company is defined under memorandum of association. In India, a private limited company is the most popular type of business structure due to its various advantages, including limited liability protection, ease of formation and maintenance, and separate legal entity status.

What is an OPC? 

An OPC or One Person Company Registration is regulated under the Companies Act, 2013. It is a single owner company, incorporated with a Private Limited structure. It does not allow the sharing of ownership between multiple individuals or corporate entities. When compared to other sole owner structures like a Proprietorship firm, an OPC offers limited or restricted liability to its shareholder. 

Difference Between Company and OPC 

There are certain differences between a company and OPC on various basis. There detailed difference is given in the following table: 

Conversion of OPC into Private Limited Company 

Converting a One Person Company (OPC) into a Private Limited Company is a strategic move for entrepreneurs seeking to expand their business operations, attract investment, or bring in partners. One can convert OPC into Pvt Ltd Company by following a formal procedure. However, an OPC can be converted into a Pvt Ltd Company automatically if its paid up capital exceeds ₹50 lakh or its annual turnover surpasses ₹2 crore during any financial year. 

Conclusion

One person company or OPC are usually considered best for single operators while Private Limited companies are suitable for large business or start-ups. However, both these structures have unique advantages. Similarly they can be distinguished from each other on different bases such as taxation, credibility, FDI, shareholders, ownership, governing law, etc. Understanding the differences between OPC vs Pvt Ltd company 

Frequently Asked Questions (FAQs)

1) Is pvt ltd company better than OPC? 

Both business structures have their own benefits, where Pvt Ltd Company is used for large goals, OPC can be more suitable for small businesses. 

2) What is the difference between Pvt Ltd Company and OPC on the basis of Compliances? 

In pvt ltd companies, there are multiple compliances, especially for large companies whereas there are limited compliances for OPC compared to Pvt Ltd Companies. 

3) Is Audit mandatory for Pvt Ltd Company and OPC? 

Yes, it is mandatory for both Pvt Ltd Company and OPC to conduct a statutory audit of their financial statement every year by a qualified chartered accountant. 

4) What is the minimum number of directors required in OPC and Company? 

There should be a minimum 2 directors required in Private Limited Company and minimum one director for OPC.