Women entrepreneurs in India have been contributing immensely to economic growth and innovation across different sectors for several years now. Yet, one of the major issues most women entrepreneurs face when establishing a business is deciding on the correct legal structure that is flexible, has limited liability, and is easy to manage.
A One Person Company (OPC) has proven to be the most sought-after business form among women entrepreneurs. Launched with the Companies Act, 2013, an OPC allows an individual to establish and operate a company with the benefits of a private limited company. A limited liability business model, greater credibility, and fewer compliances are offered by this business model, which is the right choice for women who are eager to start and develop their businesses efficiently.
This blog discusses the increasing use of OPCs among female entrepreneurs, including the benefits, legal advantages, and why they are becoming increasingly popular in India.
About One Person Company
A One Person Company (OPC), as given under the Companies Act, 2013, enables an entrepreneur to operate a company with private limited company privileges such as limitation of liability as well as separation of legal status.
Having only one director and shareholder, an OPC is simple to run and has low compliance. Moreover, having a nominee director ensures hassle-free succession in case of need. Increasingly, women entrepreneurs in India find this structure appealing, with the guarantee of financial security, streamlined regulations, and easier access to capital. Backed by government schemes, OPCs serve as the perfect platform for women entrepreneurs to start and develop their own ventures.
Why More Women Entrepreneurs Are Choosing OPCs?
1. Complete Ownership and Control of the Business
One of the greatest benefits of an OPC is that it enables one person to own and manage the business without needing a partner or co-founder. Most women entrepreneurs like to make independent decisions and would like to operate their businesses independently without interference from others. An OPC gives them total control of operation, strategy, and finances, such that they can create their businesses according to their will.
2. Limited Liability Protection
One of the key areas of concern for entrepreneurs is financial risk. In sole proprietorships, the owner of the business is personally liable for all the debt or loss, and this can expose personal property like savings, assets, and valuables. In contrast, an OPC has limited liability protection, as it means a woman entrepreneur’s personal assets are not exposed to business risks and liabilities. This protective legislation persuades more women to start businesses boldly.
3. Improved Credibility and Business Expansion Opportunities
In comparison to sole proprietorships, OPCs are considered more legitimate business entities because they are registered with the Ministry of Corporate Affairs (MCA). This makes it simpler for women entrepreneurs to establish trust with customers, obtain investors, and win big business contracts. Financial institutions also prefer giving loans to registered companies rather than unregistered firms, and it is easier for an OPC to avail business loans and avail funds.
Having an OPC also enables entrepreneurs to expand their business, partner with larger brands, and bid for government tenders, resulting in long-term expansion.
4. Tax Exemptions and Reduced Compliance Burden
OPC has the advantage of tax relief over proprietorship. Instead of paying income tax according to individual tax slabs, OPCs are subjected to corporate tax rates, which tend to impose lower tax obligations. Office rentals, travel allowances, and operation expenses are common business expenses, which can be deducted as a tax expense and lower the tax base. Furthermore, OPCs have fewer compliance needs than private limited companies, thus they are more convenient to deal with without voluminous paperwork or regulatory obstacles.
5. Access to Business Loans and Financial Assistance
Women business owners find it difficult to obtain funds for their ventures, but an OPC enhances the likelihood of receiving loans, credit facilities, and funding from investors. Banks and financial institutions find registered companies more trustworthy than sole proprietorships, so it is easier for an OPC to get business loans at reduced interest rates.
Additionally, OPCs qualify for government-funded financing schemes like Stand-Up India, Mudra Loans, and Women Entrepreneurship Development Schemes that offer credit assistance and working capital loans to women entrepreneurs.
6. Easy Business Succession Planning
In contrast to sole proprietorships, in which the business is dissolved upon the death of the owner, an OPC provides for smooth succession planning. When registering an OPC, a nominee director has to be appointed, who will assume the business in case the owner cannot carry on the business.
This offers business continuity without any legal complications, thus it is suitable for single mothers, women with family businesses, or people looking for long-term financial security for their dependents.
7. Promotion through Government Policies
The Indian government has initiated different policies for encouraging women entrepreneurs, and OPCs are a perfect match for these policies. Stand-Up India, Mudra Yojana, and Startup India are such programs that provide financial support, guidance, and tax relief to women-owned enterprises.
The government also provides subsidized loan programs, reduced interest rates, and reserved procurement for women-owned enterprises. With registration as an OPC, women entrepreneurs can avail these government incentives to lower startup expenses and boost business growth.
8. Flexibility to Change to a Private Limited Company
As the company expands, an OPC gives the freedom to convert into a Private Limited Company when it attains a turnover of Rs 2 crore or a paid-up capital of Rs 50 lakh. This gives women entrepreneurs the freedom to scale business, raise capital from investors, and introduce more directors or stakeholders.
The formal process of converting OPC to a Private Limited Company gives entrepreneurs the ability to expand operations smoothly without the hassle of restructuring or legal issues.
Conclusion
The increasing presence of women entrepreneurs in India represents a positive move towards economic independence and business ownership. Among various structures available for running a business, One Person Company Registration is also a sought-after option with advantages of limited liability protection, convenience in running the business, increased credibility, and availability of financing.
By choosing an OPC, women entrepreneurs can legally secure their assets, arrange business financing, and enjoy government support programs. Moreover, the ability to grow and switch to a Private Limited Company gives OPCs the status of a future-proof business model for upcoming women-led ventures.
With proper guidance, support, and information, OPCs will keep empowering more women entrepreneurs in India towards financial success and long-term business sustainability.
References
The Companies Act of 2013 (Act No. 18 of 2013)
https://www.myscheme.gov.in/schemes/sui
https://pib.gov.in/
