Business Setup in India: Choose the Right Structure, Register Online and Stay Compliant
By Startup Advisory & Corporate Compliance Team at LegalDev | Qualified Company Secretaries, Chartered Accountants and Corporate Lawyers with 10+ years in startup incorporation, MCA filings and business legal setup in India.
Business setup in India starts with one decision that is hard to undo cheaply: the legal structure. Founders who plan to raise equity should usually choose a private limited company. Professionals and small partnerships who will not sell shares often do better with an LLP. A solo founder who wants limited liability can use a One Person Company, and a sole proprietorship suits only a low-risk, low-cost test of an idea. Registration itself is online and, with clean documents, can be done in days.
MCA Filing Fee
Nil up to ₹15 Lakh Authorised Capital
New Company Filing Deadlines
30, 60 and 180 Days
Registration Time (Clean Documents)
A Few Working Days
Key takeaways
Pick the structure on three facts: who owns it, who will fund it, and how much annual compliance you can carry.
Private limited company and LLP registrations are filed on the MCA portal. Sole proprietorships have no incorporation step.
The MCA filing fee is nil for authorised capital up to ₹15 lakh. Stamp duty, DSCs and professional fees are the real costs.
Registration is the start of compliance, not the end. A new company has filings due within 30, 60 and 180 days.
NRIs and foreign investors can use a company or an LLP, but sector rules and the land-border investment rules decide the route.
Types of business setup in India: which structure fits you
Four structures cover almost every first-time founder. The differences that matter in practice are liability, funding and compliance.
| Point | Sole proprietorship | One Person Company | LLP | Private limited company |
|---|
| Separate legal entity | No | Yes | Yes | Yes |
| Owner liability | Unlimited | Limited to shares | Limited to contribution | Limited to unpaid shares |
| Minimum people | 1 | 1 member plus a nominee | 2 designated partners | 2 directors, 2 shareholders |
| Registration | None as such; trade licences and GST as needed | MCA (SPICe+) | MCA (FiLLiP) | MCA (SPICe+) |
| Raising equity funding | Not possible | Difficult | Difficult; no shares | Designed for it |
| Statutory audit | Only if tax audit limits apply | Yes | Only above prescribed limits | Yes, every year |
| Annual ROC filings | None | Yes | Form 11 and Form 8 | AOC-4 and MGT-7, among others |
Choose a private limited company if you expect investors, employee stock options or a later sale. It is the structure venture investors, banks and large customers expect. Choose an LLP if you are a professional practice or a small partnership, if profits will be shared among partners, and if you want fewer filings. Choose an OPC if you are a single owner who wants a separate entity, and note that the Rules were amended in 2021 so that NRIs can form OPCs and the residency test for the member is 120 days in the preceding year. Choose a proprietorship only when the money at risk is small, because there is no wall between your business debts and your personal assets.
Tax treatment differs too. A proprietor is taxed at individual slab rates, an LLP is taxed at a flat rate (30% plus surcharge and cess, at the time of writing), and a company pays corporate tax with a concessional regime available if you give up certain deductions. Rates and conditions change, so confirm the current-year position with your CA before you decide on tax grounds alone.
NRIs and foreign nationals face restrictions on holding proprietorships and partnership firms under FEMA, which is one reason companies and LLPs are the usual routes for them. See also our page on NRI company registration in India.
Company registration process: private limited, OPC and LLP
Pvt Ltd company registration on the MCA portal
A private limited company is incorporated through Form SPICe+ on the MCA V3 portal, which bundles name reservation, DIN, PAN, TAN and other registrations into a single application. Our private limited company registration service follows this sequence:
1Check name availability
Pick a name that does not resemble an existing company or trademark, and have two alternatives ready.
2Collect documents and get DSCs
Each director needs a digital signature certificate and a DIN (allotted through the form for first-time directors).
3Fix the registered office
You need an address in India with proof of right to use it.
4Decide authorised and subscribed capital
Keeping authorised capital at or below ₹15 lakh keeps the MCA filing fee at nil.
5Draft the MoA and AoA
These define what the company can do and how it is run. Do not accept a generic template without reading the objects clause.
6File SPICe+ Part B with the linked e-forms
Pay stamp duty and sign with DSCs.
7Receive the Certificate of Incorporation with CIN, PAN and TAN
With a clean file, practitioners report a few working days. Queries from the Registrar add time.
LLP incorporation process
An LLP is incorporated using Form FiLLiP.
1Reserve the name, and obtain DSCs and DPINs for two designated partners, at least one of whom is resident in India (120 days in the preceding year).
2File FiLLiP with the registered office proof and partner details.
3Receive the Certificate of Incorporation.
4Execute the LLP agreement and file Form 3 within 30 days of incorporation.
There is no minimum capital for an LLP, but the contribution figure decides filing-fee slabs and stamp duty on the agreement, so do not inflate it. Our LLP registration page covers the agreement clauses that cause disputes later.
One Person Company registration
An OPC follows the SPICe+ route with one extra step: the sole member names a nominee and the nominee’s consent is filed. The structure suits a founder who wants limited liability without bringing in a second shareholder. See One Person Company registration for eligibility details.
Documents required for business setup
| Applicant | Documents |
|---|
| Indian director, partner or member | PAN, Aadhaar, passport-size photograph, proof of address (bank statement or utility bill, recent) and a mobile number and email |
| Registered office | Rent agreement or ownership proof, utility bill not older than the period the portal allows, and NOC from the owner |
| Company | Proposed names, objects, capital structure and subscriber details |
| NRI or foreign director | Passport (notarised or apostilled as required), address proof, and a second ID. Foreign documents often need notarisation or apostille |
| Foreign corporate shareholder | Certificate of incorporation, board resolution authorising the investment, and constitutional documents |
| Sole proprietorship | PAN, Aadhaar, address proof, bank account and any trade licence the activity needs |
The commonest delay we expect to see is the registered office proof. Utility bills in a landlord’s name and an expired NOC are classic causes of Registrar queries. Prepare these before the form is opened.
Cost of business setup in India
Government fees are the smallest part of the bill. Under the SPICe+ fee waiver, there is no MCA filing fee for authorised capital up to ₹15 lakh. Above that, slab-based fees apply.
| Component | Private limited company | LLP |
|---|
| MCA filing fee | Nil up to ₹15 lakh authorised capital; slabs above | FiLLiP fee depends on contribution slab |
| Name reservation | Nominal; often integrated in the form | Nominal, with RUN-LLP or inside FiLLiP |
| Stamp duty | Varies by state and authorised capital | Varies by state on the LLP agreement |
| DSC and DIN/DPIN | Per director or partner | Per designated partner |
| PAN and TAN | Allotted through the form | Allotted through the process |
| Professional fees | Depends on provider and scope | Depends on provider and scope |
Registration providers publish all-in estimates for a basic two-director company in the range of ₹7,000 to ₹25,000, for example in Patron Accounting’s cost breakdown. Treat these as indications, not quotes. State stamp duty is the line that moves most, so a Maharashtra or Karnataka registered office can cost far more than a smaller state for the same capital. We would also advise against setting authorised capital far above what you need, since it raises stamp duty and fee slabs and cannot be undone without a formal alteration.
Business setup for NRIs and foreign investors
An NRI or foreign entity can hold shares in an Indian private limited company or take LLP contribution, subject to FDI policy and FEMA rules. Most sectors fall under the automatic route, which needs no prior government approval but does carry sectoral caps and pricing guidelines. A few things to confirm before you wire any money:
Sector. Some sectors have caps or conditions. Check the activity against the FDI policy.
Land-border linkage. Investments where the investor or beneficial owner is from a country sharing a land border with India need government approval under Press Note 3 of 2020. In March 2026 the Government eased this for non-controlling beneficial ownership of up to 10%, and the FEMA rules were amended on 1 May 2026. Pakistan and Bangladesh remain fully under the approval route. Reporting duties apply even where approval is not triggered. The Legal 500 summary is a useful starting point.
Resident director. A company needs at least one director who stayed in India for 182 days in the preceding financial year. An LLP needs a designated partner resident in India.
Reporting. Share allotment to a foreign investor triggers reporting to the RBI, usually within 30 days. Missing it creates a FEMA default that is more painful to fix than the filing itself.
Post registration compliance checklist
A certificate of incorporation does not finish the job. These items fall due soon after, and some are tied to dates that start on incorporation day.
| Item | Timing | Applies to |
|---|
| Open company bank account, receive subscriber money | As soon as incorporated | Company |
| Issue share certificates to subscribers | Within 2 months of incorporation | Company |
| First board meeting | Within 30 days of incorporation | Company |
| Appoint first auditor; file ADT-1 | Auditor within 30 days; ADT-1 within 15 days of appointment | Company |
| Registered office verification (INC-22) | Within 30 days of incorporation | Company |
| Declaration of commencement of business (INC-20A) | Within 180 days | Company having share capital |
| LLP agreement (Form 3) | Within 30 days of incorporation | LLP |
| GST registration | On crossing the threshold, or earlier if you sell inter-state or online | All |
| Director KYC | Annually, per MCA’s current due date | Company |
| Annual filings (AOC-4 and MGT-7) | 30 and 60 days after the AGM | Company |
| LLP Form 11 and Form 8 | 30 May and 30 October each year | LLP |
| Income tax return, and TDS where applicable | As per tax calendar | All |
Optional but often useful registrations include Udyam, Startup India recognition, shops and establishment licence, PF and ESI once thresholds apply, and trademark. For the full yearly calendar, see our ROC compliance services.
How LegalDev handles business setup end to end
Our team of Company Secretaries, Chartered Accountants and Corporate Lawyers has worked on startup incorporation, MCA filings and legal setup in India for more than ten years. The advice we give first is usually about structure, since conversions later are expensive.
What the engagement covers:
Structure advice based on funding plans, ownership, liability and tax, in plain terms
Name search and reservation, with trademark conflicts checked
Drafting the MoA, AoA or LLP agreement to match how you will actually run the business
Filing SPICe+ or FiLLiP, with DSCs, stamp duty and Registrar queries handled
NRI and foreign investor setup, including document apostille and FEMA reporting
Post-registration filings: bank account support, auditor appointment, INC-20A, GST and the annual calendar
We cannot promise a date for the Registrar’s approval, and we will tell you when a structure is a poor fit even if it is the cheaper one. When you have your names, co-founder details and a registered office address, talk to our startup team for a structure recommendation and a cost estimate.
Useful references: the MCA portal for forms and circulars, India Code for the Companies Act, 2013 and the LLP Act, 2008, and Startup India for recognition benefits.
Frequently Asked Questions (FAQs)
A private limited company, if you expect to raise equity or issue stock options. An LLP suits a professional practice or a small partnership that will not sell shares.
With correct documents, the Certificate of Incorporation can arrive within a few working days of filing. Registrar queries, name objections and apostille delays for foreign documents lengthen it.
The Companies Act sets no minimum paid-up capital. You choose authorised and subscribed capital that suits the business.
No, a private limited company needs at least two directors and two shareholders. A single founder can use a One Person Company.
Yes. A company or LLP is the usual route. At least one director must be resident in India, and sector rules, FEMA reporting and, where relevant, the land-border investment rules apply.
You need a registered office address in India with proof of right to use it, such as a rent agreement and owner’s NOC. Many founders use a home or co-working address if the owner consents.
Not automatically. It becomes mandatory once turnover crosses the threshold for your state and activity, or earlier if you make inter-state supplies or sell through certain e-commerce channels.
Yes. Both can be converted, but conversion needs filings and stamp duty, and it is easier to pick the right structure at the start.
Yes. A private limited company must have its accounts audited every year, whatever its size.