A one person company is defined as a company formed with a single person as a member, different from the traditional manner of having at least two members. This one person is wholly responsible for the business and is able to take more risks without affecting or suffering the loss of personal assets.
See some advantages and disadvantages of one person company here…
One Person Company Features
- A one person company requirement is that just one person is the subscriber to forming the company and the company will then be treated as a private one
- One shareholder and one director can be the same person
- Prior written consent must indicate another person who will become a member in succession to the subscriber through illness or death – this person is known as the nominee
- The letters OPC will be suffixed with the company name to distinguish it from other companies
One Person Company Advantages
Bank loans are simple to arrange when you register as a one person company. Funds for entrepreneurs can also easily be raised through investors and other financial institutions, with a lower rate of interest on loans.
Limited liability is relevant to the values of the shares held. This results in less compliance-related burdens and various exclusions.
Benefits under income tax law are applicable, and late payments are covered by the Enterprises Development Act 2006 which entitles interest receipts of three times more than bank rates. Directors’ remuneration, rent, and interest are all deductible expenses.
Increased trust and prestige is the trademark of a one person company which is easy to manage. There’s no need for annual or extraordinary general meetings, just a board meeting conducted every six months with minutes entered into the minutes book.
One Person Company Disadvantages
The main disadvantage is the high rate tax which in compliance with the law is set at 30%. This can quickly reduce any profits and is therefore unsuitable for high turnover – the better choice here would be to build up a private limited company rather than having to convert at a later date.
Incorporation is another downside as a person cannot be eligible to incorporate more than one company – if you need to start another company as a one person company it’s not allowed. This may cause an issue for those wanting to own serial businesses.
One person management may become a problem for business development if help is required for success and growth when this is entirely dependant on one persons’ ability to make decisions.
One Person Company Advice
Look to trusted bookkeeping services London experts to help you with you daily accounting for your one person company. Payroll services for small businesses are just one operation that will be tailored to suit your needs. You’ll be assured of keeping up to date with any changes in legislation, meeting all of your payroll obligations, and getting professional help with all of your financial responsibilities.