The greatest challenge to most creators, consultants, and freelancers is how to operate a business on their own and at the same time, create reliable and professional image for themselves in the market. As their business expands, they require a framework that assists them to increase their incomes, earn the trust of their clients, and sustain themselves in the long run without complicating their day-to-day operations. At this stage, a One Person Company (OPC formation) formation would be a good alternative. It provides the benefit of having a formal company for a solo professional, but it also allows one to work at their own discretion.
Gives a Professional Identity That Builds Trust
The biggest benefit an OPC can have is a well-known and distinct business identity. A creator or consultant does not have to deal with as an individual; he/she can instead issue proposals, sign contracts, and raise invoices on behalf of a company. This assists in making the work and their professional stance serious among the clients. The approach most organizations use is the signing of registered companies as they are assured that the service provider is following standards and keeping records and knows what professional responsibility entails. The OPC training enables individual workers to earn that trust without having to have partners or extensive infrastructure.
Limited Liability Makes Business Safer
Creators and freelancers usually accept several projects which are associated with financial risks and/or use of equipment or prolonged commitment. In case of such activities carried out individually, any loss or conflict may have an impact on personal capital. In an OPC, the business is only limited to liability. This makes solo professionals comfortable enough to work on larger projects, invest more in better tools and increase services without being afraid that a failure can put them in personal financial distress.
Better Access to Business Contracts and Payments
Most firms would rather transact business with registered entities particularly where the size of the contract is huge. This is one of the opportunities that are lost by freelancers as they do not have a formal structure of operation. An OPC is used to circumvent this shortcoming. It facilitates ease of qualification to corporate projects, retainer contracts and assignments of long duration. Even processing payments is easier since the majority of companies have policies of releasing payments to registered businesses. This will enable innovators and advisors to access larger markets and more predictable sources of revenue.
Helps Build a Scalable Brand
As your business expands, you might seek to employ assistants, editors, writers, designers or accountants. It is hard to operate all this under an informal set-up. An OPC means that you can get more people on board when necessary. You may also increase your services, branch out or even partner with another business without leaving the actual control of your business. In the case of creators and freelancers who aspire to create their own brand, an OPC serves as the foundation of the more robust business identity.
Simpler Compliance Compared to Other Company Types
Compliance work is one of the concerns that solo professionals are concerned with. An OPC has less legal obligations and reporting duties compared to the case of private limited companies. This makes it feasible even in the case of a person who lacks a committed team. Basic accounting and annual record management are straightforward and easy to understand. Annual filings are understandable. It leaves the freelancers and consultants with the advantages of a company without the additional paperwork that may hinder their creative or consulting work.
Better Tax Planning Options
When switching between personal and business income, there are a number of tax planning opportunities available. You are allowed to promise expenses associated with business like equipment, software, traveling, workspace, and professional services. These inferences cannot always be made or even handled with ease with individual taxation. It is more efficient to manage income with an OPC by solo professionals. This assists in keeping a greater share of their incomes particularly at the time when their efforts start growing.
A Pathway for Future Growth
As your business grows, you might wish to change your OPC into a private limited company. This transition is smooth in the law when your turnover or paid-up capital has reached a set limit. This renders the OPC formation an ideal entry point to creators, consultants and freelancers who desire to start small but leave the possibility of going big in future.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Also Read: How One Person Company Registration Builds Credibility for Solo Entrepreneurs
