There are a few disadvantages of a one-person company that are discussed below:
As a corporate form, you cannot avail of the tax slab advantage. In proprietary, you are required to pay according to your salary at 10%, 20% or 30% tax rate. But in the case of one personal company, you are directly charged 30% income tax. The high tax rate is a big disadvantage of a one-person company.
Compliance cost of partnership firm or proprietary is very low compared to One Person Company.
You are required to specify a one-person company in your company name in the bracket. There is a slightly lower impression that the organization is kept running by one and only person. Another side, if you start your company with a couple of shareholders, the administration can’t be dedicated, and you can offer impressions to customers moreover.
A shareholder is one, and that person makes all the decisions. On the off chance that he is insightful, it is excellent; however, in some cases, cross-check is required for business development. The company’s success and growth are all dependent on one person’s decision-making ability.
You can incorporate one and only OPC (One Person Company). It is not permitted if you need to start another company as OPC. In today’s quick economy, more than one business can differentiate income and spare you from enormous misfortunes. One and only stream of business is unsafe these days. Having this condition is a snag for serial business people.
There is the procurement of automatic conversion of One Person Company into a Private Limited Company. If you appraise a high turnover of your business or you have effectively high turnover, the better choice is to build up a private limited company than One Person Company. Setting up OPC and, in some cases, conversion of one person company into a Private Limited Company is not a good idea.