Company Registration in India

Company law in India sets the minimum people, the liability and the audit trigger. It does not set the set-up cost. That varies by state stamp duty and by what your adviser charges. Anyone quoting you one national price for registration is quoting their own fee, not the law’s.

What are the four structures, and what does each one require?

Two limits from the same Act are worth knowing. A private company caps its membership at 200. A person can be a member of only one One Person Company at a time. The member and the nominee must both be Indian citizens resident in India.

What does limited liability actually protect you from?

It separates the business’s debts from your own. If an LLP or a company cannot pay a supplier, the supplier’s claim is against the entity. Your house is not in the pool. A sole proprietorship has no such wall. The business and you are the same legal person, so a business debt is your debt.

The wall has a well-known door, and lenders use it. Banks routinely require a personal guarantee from the promoter on a small business loan. The moment you sign that guarantee, limited liability stops protecting you for that debt. So the protection is real for trade creditors and largely theoretical for your bank. Read our note on business loan interest rates before you assume otherwise.

Where does the money actually go when you register?

Three buckets. None of them is set by the Companies Act. Read business current accounts for the banking side.

The buckets are these. Government fees, which include the MCA filing fee and state stamp duty on the memorandum and articles. Professional fees to a company secretary or chartered accountant, which is usually the largest item. And digital signature certificates for every director or designated partner.

Stamp duty is a state levy and differs materially between states. That is why national “company registration for ₹X” advertising is misleading rather than merely optimistic. Ask any provider to split the state fee from their own fee. Ask them to name the state. If they will not split it, that tells you something.

We do not publish a registration cost table, because we cannot verify a per-state figure that stays correct. The mechanism above is what you need to price a quote you have been given.

What does each structure cost you every year after that?

This is where founders are surprised, and it is the real decision. A private limited company and an OPC must have their accounts audited every financial year, whatever the turnover. That is an audit fee you pay in year one with zero revenue. Both file yearly returns and accounts with the Registrar. Both hold board meetings that must be minuted.

An LLP escapes the audit until it crosses ₹40,00,000 of turnover or ₹25,00,000 of contribution. Below those thresholds the annual burden is two filings and a tax return. A proprietorship files nothing under company law. You file your own tax return, plus GST returns if you are registered.

Over three years, the yearly cost gap between a company and an LLP beats the set-up gap. If you do not need equity investors, that recurring cost is the number to optimise.

What do you register for after incorporation?

Incorporation is not the end of the list. PAN and TAN are issued with the incorporation, through the integrated form. Beyond that you will usually need a current account. Add Udyam registration if you want MSME benefits. Add GST once you cross the turnover threshold or sell interstate. Some states also levy professional tax.

Start with Udyam registration, which is free and unlocks the collateral-free schemes. Then handle GST registration only when you actually need it. Signing up early because it “looks professional” just buys you monthly returns.