As they say, if you can do it yourself, do not hesitate to do it right away. This belief is also applicable for the people who are bold enough to study how to incorporate a company by themselves without the help or resources of other investors.
In the world of business, corporations are usually associated with big operations. After all, the known corporations are the industry giants. However, this has been changed when single-person corporations have been introduced to India’s Company Act in 2013. This is detailed under the Section 2 (62) of the said legislation.
As the owner of the single-person corporation, you will be handling multiple positions. You are the sole shareholder, director, and officer of your company.
Among your tasks are deciding on major financial decisions, issuance of stocks, approval of loans or acquisitions, and setting salaries and compensation, among others.
It should be noted that only a natural person who is an Indian citizen and resident is allowed to be part of a one-person company. An Indian resident is someone who has stayed in the country for at least 182 days.
In addition, a person can only be a member of a one-person corporation once.
Steps on How to Incorporate a Company with One Person
If you are interested in single-person company formation in India, take note of the following procedures on how to do so.
Application of digital signature certificate. First of all, you have to secure the digital signature certificate of the director along with the following documentation:
- address proof
- Aadhaar card
- PAN card
- email ID
- contact number
Application of director identification number. There is an appropriate form needed to be accomplished when applying for director identification number. It will be submitted along with the name and the address proof of the director.
Application for name approval. It is only necessary to secure an approval for the name of about-to-be incorporated company. A one-person corporation is deemed as a private limited company.
You can get your company’s name approved by submitting an application via Form SPICe (Simplified Proforma for Incorporating a Company Electronically) 32 or RUN (Reserve Unique Name) Web service of the Ministry of Corporate Affairs.
Preparation of necessary documents. You have to prepare the following documents for submission to the Registrar of Companies.
- Memorandum of Association
- Articles of Association
- consent form of a nominee in behalf of the director
- proof of the registered office
- proof of ownership
- affidavit and consent of the director
- declaration by a professional party validating full compliance
Digital filing of forms and documents. All the prepared documents will be submitted to the online platform of the Ministry of Corporate Affairs subject to approval.
Issuance of the certificate of incorporation. The Registrar of Companies will issue a certificate of incorporation after verifying your documents. After this, you can now commence operations for your single-person company.
One-person Company Vs. Sole Proprietorship
You might get confused between one-person corporations and sole proprietorship. The following are their key differences to understand them better.
- For a one-person company, the owner is a separate entity from the business itself. Sole proprietorship acknowledges the owner and the business as one entity.
- Single-person corporation has limited liability, which means the personal assets of the owner could never be used to settle the financial obligations of the company. Meanwhile, in sole proprietorship, the owner is liable to the losses and debts of the business.
- A single-person company, as a registered private limited company, is taxed under the income tax law governing such corporate structure. The revenues generated by sole proprietorship, on the other hand, are considered as the income of the owner and taxed as an individual’s income.
If you are looking for top-notch services, contact 3E Accounting India right away. Our team is more than willing to provide assistance to your company. We are a corporate service provider in India offering accounting and business advisory services, among others.