Many times startups need to borrow money and take things on credit. In case of proprietorship firms, Proprietor's personal savings and property would be at risk incase business is not able to repay its loans. In a one person private limited company, only investment in business is lost, personal assets of the directors are safe.
In India, OPC is a Private limited company, which is a popular and well known business structure. Corporate Customers, Vendors and Govt. Agencies prefer to deal with Private Limited Company instead of proprietorship firms.
The OPC business helps Startup Entrepreneurs to easily test their business model, and upon building a marketable product, they can approach Angel investors, Venture capitalists for funding and easily convert their OPC into multi shareholder Private Limited company.
This leads to fast decision making and execution. Yet OPC can appoint as many as 15 directors for administrative functions, without giving any share to them.
OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct Annual General Meeting (AGM) and other regular compliances.
OPC Company is easy to sell, very less documentation and cost is involved in selling a One Person company.
