Swagatika Mohapatra

Currently:

Marketing, Razorpay

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GTM Strategy

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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Power of Attorney (POA) in India: Meaning, Types & Process Explained

Power of Attorney (POA) in India: Meaning, Types & Process Explained

A Power of Attorney (POA) is a legally recognised tool in India that allows you to delegate authority to another individual. Whether it’s managing property transactions, overseeing business operations, or making urgent healthcare decisions, having someone you trust act on your behalf becomes essential.

It ensures your affairs continue smoothly and lawfully, even when you are unable to manage them directly. 

In this guide, we’ll cover the definition of a Power of Attorney, its importance, types, and structure and provide insights on drafting, revoking, and using it effectively.

Table of Contents

What is a Power of Attorney?

A Power of Attorney (POA) is a legal document in which one person, known as the Principal, authorises another person, called the Attorney-in-fact or Agent, to act on their behalf.

  • Purpose: To delegate decision-making powers for specific or broad tasks.
  • Scope: May cover financial, property, legal, or medical matters.
  • Duties of Attorney-in-Fact: The agent is expected to act in good faith, follow the instructions of the principal, and protect the principal's best interests.

In India, a POA is governed by the Indian Contract Act, 1872, and recognised under the Powers of Attorney Act, 1882.

Why is a Power of Attorney Important?

A Power of Attorney holds significance because:

  • Delegates responsibilities: Useful when you live abroad or are unavailable to handle tasks.
  • Ensures legal protection: Provides a valid legal framework, reducing the risk of fraud or disputes.
  • Offers flexibility: Can be broad or limited, depending on your needs.
  • Medical decision-making: Ensures someone you trust can make healthcare choices during emergencies.
  • Business continuity: Prevents disruption in financial and legal transactions.

Types of Power of Attorney Forms

In India, POAs can be categorised based on their scope and purpose:

  1. General Power of Attorney (GPA): Grants broad powers to the agent for financial, property, and legal affairs.

  2. Durable Power of Attorney: Remains valid even if the principal becomes mentally incapacitated.

  3. Special/Limited Power of Attorney (SPA): Authorises the agent to perform only specific tasks, such as selling a property.

  4. Medical Power of Attorney: Gives authority to make healthcare-related decisions if the principal cannot.

  5. Springing Power of Attorney: Becomes effective only upon a particular event, such as illness or absence.

Each type has its unique purpose, making it important to choose based on your specific requirement.

Structure of a Power of Attorney Document

A legally valid POA must include certain essential elements:

  • Identification of Parties: Full details of the Principal and Attorney.
  • Powers Granted: Clearly defined scope of authority.
  • Validity Duration: Period for which the POA remains effective.
  • Termination Conditions: Events that end the POA (e.g., completion of the task, revocation, or death).
  • Signatures and Witnesses: Both parties must sign, and witnesses should attest.
  • Notarisation/Registration: Depending on the type of POA, notarisation or registration with the sub-registrar may be required for enforceability.

Format of Power of Attorney

A standard POA format in India typically includes:

  1. Title: “Power of Attorney”
  2. Details of Principal and Agent: Names, addresses, and identification.
  3. Recitals: Background and reasons for creating the POA.
  4. Grant of Powers: Specific rights and authority granted.
  5. Validity Clause: Duration or conditions of applicability.
  6. Signature and Date: Signed by principal and agent.
  7. Witness Signatures: At least two witnesses.
  8. Notarisation/Stamping: To comply with legal requirements.

General Power of Attorney vs Special Power of Attorney

Aspect General Power of Attorney Special Power of Attorney
Scope Broad- covers multiple financial, legal, and property-related matters Limited- specific task only
Purpose Suitable for ongoing management of affairs Ideal for one-time transactions (e.g., property sale)
Convenience Offers flexibility and continuity Restricts misuse due to limited scope
Termination Can be revoked anytime by the principal or by death/incapacity Terminates automatically upon task completion

Choosing between GPA and SPA depends on whether you need long-term authority or task-specific delegation.

Key Considerations for a Power of Attorney

When creating a POA, keep the following in mind:

  • Select a trustworthy agent: Ensure the person is reliable and capable.
  • Define scope clearly: Avoid vague language that may lead to misuse.
  • Seek legal advice: Especially for property-related or durable POAs.
  • Register where necessary: For property transactions, registration with the sub-registrar is mandatory.
  • Know revocation rights: Understand how to cancel or modify your POA if required.

How to Revoke a Power of Attorney

A Power of Attorney is not permanent; you can revoke it at any time as long as you are competent.

Steps to revoke a POA:

  1. Draft a revocation notice in writing, stating that the authority granted is withdrawn.
  2. Inform the attorney-in-fact directly about the revocation.
  3. Notify concerned parties (banks, registrars, institutions) to avoid unauthorised use.
  4. Register the revocation deed with the sub-registrar if the original POA was registered.
  5. Public announcements (in newspapers) are advisable to ensure wide awareness and prevent misuse.

Frequently Asked Questions (FAQs)

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Frequently Asked Questions

Is a Power of Attorney created online legally valid in India?

Yes, a Power of Attorney (POA) drafted online is legally valid in India as long as it meets all legal requirements:

  • It must be appropriately drafted with precise details of the principal and agent.
  • It should be signed by the principal in the presence of at least two witnesses.
  • For certain transactions (like property matters), the POA must be notarised or registered with the Sub-Registrar to be enforceable.

When is a Power of Attorney required to be registered?

Registration of a POA is mandatory in specific cases, such as:

  • When the POA relates to the transfer of immovable property (sale, lease, mortgage, etc.).
  • If required under state laws (stamp duty and registration rules differ by state).
  • For durability and enforceability, registration is generally recommended even if not compulsory.

In other cases, notarisation alone may suffice.

What is the authentication process for Power of Attorney documents?

The authentication process includes:

  1. Drafting the POA clearly stating powers and scope.
  2. Stamping as per state laws (value varies across states).
  3. Execution (signing) by the principal in front of two witnesses.
  4. Notarisation before a notary public for legal credibility.
  5. Registration at the local Sub-Registrar’s office if it relates to property or long-term authority.

If the POA is executed abroad, it must be authenticated by the Indian Consulate/Embassy and then stamped/registered in India.

Is it safe to store my Power of Attorney document digitally?

Yes, it is safe if done carefully:

  • Store in secure cloud storage or encrypted drives.
  • Share only with trusted individuals (like your agent or lawyer).

A digital copy is helpful for reference, but the original stamped/notarised/registered document is usually required for official use.

Can I edit my Power of Attorney PDF after it has been created?

Technically, you can edit the text of a POA PDF using editing tools. However, once a POA has been executed (signed, stamped, or registered), you cannot legally alter it by editing the file.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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A Guide to Nidhi Company Registration in India – Process & Requirements

A Guide to Nidhi Company Registration in India – Process & Requirements

Starting a business is exciting, but most entrepreneurs are immediately overwhelmed by the strict regulations and complex licensing processes involved in building a financial institution. But what if there was a simpler, community-driven model designed to encourage savings and provide easy credit within a trusted group of people?

That’s exactly what a Nidhi Company offers. Popular in India’s smaller towns and communities, Nidhi Companies allow individuals to pool money, support each other financially, and grow together without the burden of full-scale NBFC regulations.

This guide covers everything you need to know about Nidhi Company registration, process, requirements, compliances, and restrictions.

Table of Contents

What is Nidhi Company?

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) that operates exclusively for its members. It is registered under Section 406 of the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA), rather than directly by the Reserve Bank of India (RBI).

The primary function of a Nidhi Company is to accept deposits from members and lend money back to its members. This “for members only” model distinguishes it from other NBFCs and ensures that operations remain community-centric.

Since Nidhi Companies deal only with their members and do not interact with the general public, they enjoy exemptions from core RBI regulations that typically apply to other NBFCs. However, they must still adhere to rules laid down by MCA and maintain transparency in their financial dealings.

The Purpose and Nature of Nidhi Companies

The central purpose of Nidhi Companies is to promote savings and thrift among their members and to facilitate easy, low-interest loans for those same members. They act as mutual benefit societies, pooling deposits and using those funds to lend back within the group.

Key characteristics include:

  • Community-Focused Model: Members both contribute and borrow, keeping financial circulation within the group.

  • Limited RBI Oversight: While they fall under the broad category of NBFCs, Nidhi Companies are largely governed by MCA rules.

  • Exemption from Core NBFC Rules: They are not required to obtain RBI approval for incorporation or daily operations.

This makes them a niche but highly effective option for people looking to run community-driven financial institutions.

Benefits of Nidhi Company

  • Encourages Savings: Members are motivated to build disciplined saving habits.
  • Access to Affordable Credit: Members can borrow at lower interest rates compared to market lenders.
  • Limited Regulatory Burden: Exemptions from most RBI regulations make operations simpler.
  • Low Risk of Default: Since lending and borrowing are limited to members, risks are lower.
  • Simple Incorporation: Registration under MCA is more straightforward than NBFC licensing.
  • Legal Status: Recognised as a public company, lending credibility and trust.

Nidhi Company Registration Process

Registering a Nidhi Company in India involves several steps:

  1. Obtain DSC & DIN – Digital Signature Certificate for proposed directors.
  2. Name Approval – File an application with MCA to get the company name approved (must include “Nidhi Limited”).
  3. Draft MOA & AOA – Prepare Memorandum of Association and Articles of Association with clear objectives.
  4. Filing for Incorporation – Submit the incorporation application along with required documents through MCA’s SPICe+ form.
  5. ROC Scrutiny – Registrar of Companies reviews and verifies the application.
  6. Certificate of Incorporation – Once approved, the company is legally formed.
  7. GSTIN & Bank Account – Apply for GST (if applicable), and open a current account for operations.

Related Read: How to apply for a Digital Signature Certificate in India

Compliances of the Nidhi Companies

After incorporation, a Nidhi Company must comply with specific filings and statutory requirements:

  • NDH-1: Filing of return of statutory compliances within 90 days of the first financial year.
  • NDH-2: Application to extend time for compliance (if required).
  • NDH-3: Half-yearly return to ROC.
  • MGT-7: Annual return filing with MCA.
  • AOC-4: Filing of financial statements with MCA.
  • Income Tax Compliances: Annual income tax return filing, tax audit (if applicable), TDS deductions, and advance tax payments.

Related Read: ROC Compliance Calendar 2025–2026: Important Filing Due Dates

Nidhi Company Incorporation Requirements

To incorporate a Nidhi Company, certain prerequisites must be met:

Before Registration:

  • Minimum 7 members required.
  • Minimum 3 directors.
  • Minimum ₹5 lakh paid-up equity capital.
  • The name must end with “Nidhi Limited”.

Post Registration (within 1 year):

  • Minimum 200 members.
  • Net Owned Funds (NOF) of at least ₹10 lakh.
  • Deposits not to exceed 20 times NOF.
  • Maintain at least 10% of deposits as unencumbered deposits (liquid assets).

Documents Required for Nidhi Company Registration

To register a Nidhi Company, you need the following documents:

  • Identity Proof: PAN card of directors and members.
  • Address Proof: Aadhaar card, passport, voter ID, or driving license.
  • Photographs: Passport-sized photos of all directors and members.
  • Office Proof: Rent agreement/ownership papers and utility bill of the registered office.
  • Digital Signature Certificate (DSC) of directors.
  • Charters: Draft MOA and AOA.
  • Foreign Directors: Passport and notarised documents if applicable.

The entire process can be completed online via the MCA portal.

Restrictions on Nidhi Companies

To ensure that Nidhi Companies remain true to their purpose, certain restrictions apply:

  • Cannot accept deposits from or lend to non-members.
  • Cannot carry out chit funds, hire purchase, leasing finance, or insurance businesses.
  • Cannot issue debentures, preference shares, or other securities.
  • Cannot advertise for deposits to the general public.
  • Cannot open current accounts in the name of members.
  • Cannot conduct corporate transactions such as partnerships with other financial institutions.
  • Must operate strictly within the framework of member-only deposit and lending.

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Frequently Asked Questions (FAQs)

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Frequently Asked Questions

Can a Nidhi Company establish branch offices?

Yes, a Nidhi Company can open branch offices, but with conditions:

  • It can open up to 3 branches within the same district after fulfilling compliance requirements.
  • Prior approval from the Regional Director (MCA) is required to open branches outside the district.
  • A Nidhi Company must have a profit after tax for 3 consecutive years before opening a branch.

Can a salaried individual serve as a Nidhi Company director?

Yes, a salaried individual can be appointed as a director in a Nidhi Company, provided:

  • Their employment contract does not prohibit directorships.
  • They comply with all MCA eligibility criteria (such as being a resident of India, holding a valid DIN, etc.).

What types of financial transactions are not permitted for Nidhi Companies?

Nidhi Companies are restricted from engaging in the following activities:

  • Accepting deposits or lending to non-members.
  • Running chit funds, hire purchase finance, leasing, or insurance businesses.
  • Issuing preference shares, debentures, or other debt instruments.
  • Opening current accounts in the name of members.
  • Advertising for deposits from the general public.

Entering into partnerships in lending or borrowing.

Can a Nidhi Company do business in microfinance?

No, Nidhi Companies cannot operate as microfinance institutions (MFIs). Microfinance involves lending small amounts to non-members, often at higher interest rates, which violates Nidhi Company rules.

Is a Nidhi Company required to obtain an NBFC license from RBI?

No, a Nidhi Company does not need an NBFC license from RBI. They are exempt because their operations are limited to members and do not affect the wider public.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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What is Company Valuation & How to Calculate It? Methods Explained

What is Company Valuation & How to Calculate It? Methods Explained

When you hear about startups raising millions of dollars or listed companies being called “overvalued” or “undervalued,” the concept at the centre of it all is company valuation. Whether you’re an investor evaluating opportunities, a business owner planning to raise capital, or a professional analysing market trends, understanding how a company’s value is calculated is essential.

In this guide, we’ll break down what company valuation means, how to calculate it, key formulas, real-world examples, and why it’s essential.

Table of Contents

What is the valuation of a company?

Company valuation is the process of determining a business's financial worth or fair value. It is not just about looking at profits or assets- it’s about considering both financial and non-financial factors that influence the company’s value.

For example:

  • Financial factors include revenue, profit margins, debt levels, and cash flows.
  • Non-financial factors include brand reputation, customer base, intellectual property, and market potential.

A valuation helps stakeholders, founders, investors, lenders, or acquirers understand the true worth of a company for purposes like fundraising, mergers & acquisitions, taxation, or stock market investing.

How to calculate company valuation?

There is no single method to calculate company valuation. Instead, there are three primary approaches commonly used:

1. Income Approach

  • Focuses on the company’s future earnings potential.
  • The most common method here is the Discounted Cash Flow (DCF) model.
  • DCF estimates the present value of future cash flows, adjusted using the Weighted Average Cost of Capital (WACC).
  • Useful for startups and growing companies where future cash flows are expected to be significant.

2. Asset Approach

  • Focuses on the net value of the company’s assets after deducting liabilities.
  • Often called the Net Asset Value (NAV) method.
  • Formula: NAV = (Fair Value of Total Assets – Total Liabilities).
  • Suitable for asset-heavy businesses like real estate, manufacturing, or holding companies.

3. Market Approach

  • Values a company by comparing it with similar businesses in the market.
  • Uses multiples such as:

    • Price-to-Earnings (P/E) Ratio
    • Price-to-Sales (P/S) Ratio
    • Price-to-Book Value (PBV) Ratio

  • Helps determine whether a company’s stock is undervalued or overvalued compared to peers.

Key metric: EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) is often used in valuation since it reflects a company’s operating performance without non-cash and non-operating costs.

Company Valuation Formula

There is no one universal formula for valuation- different methods use different formulas. Here are some of the most widely used:

1. Asset Approach (Net Asset Value)

NAV = Fair Value of Assets - Total Liabilities

Example: If a company has assets worth ₹100 crore and liabilities worth ₹40 crore, its NAV = ₹60 crore.

2. Income Approach (Discounted Cash Flow)

Where, 

CFt = Cash flow in year t

W ACC = Weighted Average Cost of Capital

t = Time period

This gives the present value of all future cash flows.

3. Market Approach Ratios

  • P/E Ratio
  • P/S Ratio

  • PBV Ratio

These ratios are compared with industry averages to determine valuation.

Company Valuation Examples

Example 1: Discounted Cash Flow (DCF)

Suppose a company is expected to generate free cash flows of ₹10 crore annually for the next 5 years. The discount rate (WACC) is 10%.

= ₹37.9 crore (approx).

If the market cap of the company is ₹30 crore, the stock may be undervalued.

Example 2: Relative Valuation (P/E Ratio)

  • Company A’s P/E ratio = 18x
  • Company B’s P/E ratio = 12x
  • Industry average P/E ratio = 15x

Here, Company A is trading above the industry average (possibly overvalued), while Company B is trading below (perhaps undervalued).

Importance of Calculating a Company’s Valuation

  • For Investors: Helps identify whether a stock is overpriced or a good buying opportunity.
  • For Founders: Essential during fundraising, mergers, acquisitions, or strategic exits.
  • For Lenders: Determines the borrowing capacity and creditworthiness of a business.
  • For Markets: Provides transparency and helps maintain fair pricing of securities.
  • For Business Growth: Guides decision-making on expansions, investments, and restructuring.

Frequently Asked Questions (FAQs)

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  • Professional services 
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One Person Company
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1,499 + Govt. Fee
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  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
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Private Limited Company
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1,499 + Govt. Fee
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Limited Liability Partnership
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1,499 + Govt. Fee
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  • Professional services 
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Frequently Asked Questions

What is the information required to calculate a company’s valuation?

To calculate a company’s valuation, you need both financial and non-financial information. Key details include:

  • Financial Statements – Balance Sheet, Profit & Loss Statement, and Cash Flow Statement.
  • Revenue & Profitability Metrics – EBITDA, Net Profit, Gross Margin.
  • Assets & Liabilities – Tangible and intangible assets, debts, and goodwill.
  • Market Data – Share price, industry benchmarks, comparable company ratios.
  • Growth Projections – Future revenue, profit, and cash flow estimates.

Discount Rate – Weighted Average Cost of Capital (WACC) or required return rate.

Which company has a high valuation in India?

As of 2025, Reliance Industries Limited (RIL) and Tata Consultancy Services (TCS) consistently rank among the highest-valued companies in India by market capitalisation. Reliance dominates in energy, retail, and telecom, while TCS is a global IT services leader. Other high-valuation players include HDFC Bank, Infosys, and ICICI Bank.

How to calculate a company's valuation from equity?

A company’s valuation from equity is generally calculated using:

Equity Value = Share Price × Number of Outstanding Shares

For example, if a company’s share price is ₹1,000 and it has 1 crore outstanding shares:
Equity Value = ₹1,000 × 1,00,00,000 = ₹10,000 crore

Equity Value represents the market’s perception of the company’s worth, excluding debt.

How to calculate company valuation from revenue?

Valuing a company from revenue is usually done using the Price-to-Sales (P/S) ratio:

Valuation = Revenue × P/S Multiple

For instance, if a company generates ₹500 crore in annual revenue and the industry average P/S multiple is 4x:
Valuation = 500 × 4 = ₹2,000 crore

This method is often used for early-stage or loss-making companies where profits aren’t stable.

What are the ways to value a company?

The main ways to value a company include:

1. Asset Approach – Based on Net Asset Value (NAV).

  1. Formula: NAV = Total Assets – Total Liabilities

2. Income Approach – Based on future earnings or cash flows.

  1. Most common: Discounted Cash Flow (DCF) method.

3. Market Approach – Based on market multiples and comparables.

  1. Metrics: P/E ratio, P/S ratio, PBV ratio, EV/EBITDA.

4. Comparable Transactions Method – Comparing the valuation of similar companies sold/acquired.

5. Industry-Specific Methods – For example, startups often use Revenue Multiples, while banks may use Book Value multiples.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

Read more
Appointment of Company Secretary: Roles and Responsibilities Explained

Appointment of Company Secretary: Roles and Responsibilities Explained

When building a company, compliance is not just a checkbox- it’s the backbone that ensures smooth functioning, legal validity, and market trust. Among the key professionals steering compliance, the Company Secretary (CS) plays one of the most critical roles.

This blog discusses the appointment of a Company Secretary in India, their roles, responsibilities, eligibility criteria, and the complete procedure for appointment and removal, as guided by the Companies Act, 2013.

Table of Contents

Who is a Company Secretary?

A Company Secretary (CS) is a key managerial professional responsible for ensuring that a company complies with legal, regulatory, and governance requirements. In India, a Company Secretary serves as the compliance officer, legal advisor, and corporate governance guide.

The core duties include:

  • Overseeing compliance under the Companies Act, 2013
  • Drafting, filing, and maintaining legal documentation
  • Facilitating communication between the board of directors and shareholders
  • Distributing dividends and handling investor relations
  • Maintaining statutory records and registers
  • Organising and recording minutes of board and shareholder meetings
  • Drafting policies and internal documents for the company
  • Ensuring compliance with stock exchanges (for listed companies)
  • Managing corporate actions like mergers, acquisitions, and restructuring

Eligibility Criteria of a Company Secretary

To qualify as a Company Secretary in India:

  • One must pass the ICSI (Institute of Company Secretaries of India) exam and hold an active membership with ICSI.
  • Listed companies are required to appoint a full-time Company Secretary.
  • Public and private companies with paid-up share capital of ₹10 crore or more must mandatorily appoint a whole-time CS.

This ensures that companies above a specific size have strong compliance and governance oversight.

Importance of the Company Secretary in the Business Environment

A Company Secretary is more than a compliance officer—they are strategic advisors who ensure a business operates within legal frameworks while fostering governance and ethical practices.

Key importance includes:

  • Ensuring compliance with corporate and securities law
  • Advising leadership on legal and governance risks
  • Playing a critical role in board meetings and influencing policy decisions
  • Building trust with investors, regulators, and the public through transparent reporting

By law, only those with ICSI membership or equivalent recognised qualifications can be appointed, ensuring professional credibility.

Functions of Company Secretaries

Under Section 205 of the Companies Act, 2013, the functions of a Company Secretary include:

  • Ensuring the company complies with the secretarial standards issued by ICSI
  • Reporting compliance status to the Board of Directors regularly
  • Performing duties as prescribed by the Companies Act and other applicable laws

This formalises their role as the company’s governance backbone.

Duties of a Company Secretary

According to Rule 10 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the duties of a CS include:

  • Guiding directors on their statutory responsibilities
  • Convening and recording minutes of board and general meetings
  • Ensuring approvals for company actions like the issue of shares, loans, or mergers
  • Representing the company before regulators, tribunals, and government bodies
  • Assisting the board in company affairs and decision-making. Ensuring compliance with corporate governance standards and best practices

Responsibilities of a Company Secretary in India

In India, a Company Secretary carries responsibilities that go beyond legal compliance:

  • Facilitating business operations by ensuring all approvals are in place
  • Conducting secretarial audits to verify compliance
  • Advising on corporate transactions such as mergers, acquisitions, and share issues
  • Promoting corporate governance through ethics, transparency, and accountability
  • Acting as a communication link between management, regulators, and investors

Rules of Company Secretary Appointment in India

As per Section 203 of the Companies Act, 2013, and Rules 8 & 8A:

  • Every listed company must appoint a whole-time Company Secretary.
  • Every public or private company with a paid-up share capital of ₹10 crore or more must also appoint a CS.
  • Smaller companies may appoint a CS, though it is not mandatory.

Company Secretary Appointment Procedure in India

The process for appointing a Company Secretary involves:

  1. Notifying directors through a Board Meeting under Section 173
  2. Passing a Board Resolution for the appointment
  3. Filing Form DIR-12 with the Registrar of Companies (ROC) within 30 days
  4. Submitting Form MGT-14 (where applicable) with prescribed fees
  5. Updating statutory registers as per Section 170 of the Companies Act, 2013
  6. For listed companies, informing the stock exchange about the appointment

Procedure for the Removal/Resignation of Company Secretary

If a Company Secretary resigns or is removed:

  • The company must hold a Board Meeting to pass a resolution
  • File DIR-12 with the ROC (and MGT-14 in the case of public or listed companies)
  • Inform stock exchanges in case of listed entities

Update the register of directors and key managerial personnel as per Section 170

Frequently Asked Questions (FAQs)

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Who appoints Company Secretaries?

The Board of Directors of a company appoints a Company Secretary through a board resolution. The decision is recorded in the company’s board meeting minutes.

What is Rule 8 of the appointment of a Company Secretary?

Under Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every public company with a paid-up share capital of ₹10 crore or more must appoint a whole-time Company Secretary.

Is MGT-14 required for the appointment of a Company Secretary?

Yes, the appointment of a Company Secretary is a board resolution, and filing of Form MGT-14 with the Registrar of Companies (ROC) is required under Section 117(3) of the Companies Act, 2013.

What is the time limit for appointing a CS?

The appointment of a Company Secretary must be made within 30 days from the date on which the company becomes legally obliged (i.e., when it crosses the prescribed paid-up capital threshold or is incorporated as a listed company).

Is it mandatory to appoint a Company Secretary?

  • For private limited companies: Appointment of a CS is not mandatory, regardless of share capital.
  • For public companies: It is mandatory to appoint a whole-time CS if the paid-up share capital is ₹10 crore or more.
  • For listed companies: Appointment of a CS is always mandatory.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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What Is an LLP (Limited Liability Partnership) and How Does It Work?

What Is an LLP (Limited Liability Partnership) and How Does It Work?

In today’s dynamic business landscape, the Limited Liability Partnership (LLP) has emerged as a compelling choice for entrepreneurs, startups, and professional service providers. Offering the legal strengths of a company alongside the flexible governance of a partnership, LLPs are gaining remarkable popularity across India.

  • In the financial year 2023-24 alone, the number of LLP registrations soared by a striking 39%, reaching 58,990—a clear reflection of growing confidence in this structure.
  • The upward momentum continued into 2025, with May witnessing a 37% year-on-year jump in new LLP incorporations—outpacing the 29% growth seen in company registrations

These figures underscore a powerful trend: LLPs are fast becoming the go-to vehicle for professionals and small businesses seeking liability protection, compliance ease, and operational flexibility.

Table of Contents

What is LLP?

An LLP or Limited Liability Partnership is a business structure where business partners share limited liability, meaning their personal assets are protected in case the business incurs debts or liabilities.

LLPs are commonly used by professionals like lawyers, accountants, and consultants but are increasingly popular among small and medium-sized enterprises (SMEs).

An LLP is an ideal structure for businesses seeking operational flexibility, protection for partners' personal assets, and minimal compliance requirements. It is particularly attractive for professionals and small enterprises looking for a formal and efficient business framework.

This business structure also allows businesses to make use of the benefits of economies of scale, since LLPs can pool resources, expertise, and capital from multiple partners. By sharing operational responsibilities and costs, LLPs can reduce per-unit expenses, streamline processes, and negotiate better terms with suppliers.

This collaborative approach enables businesses to grow efficiently, expand their market presence, and achieve cost advantages typically associated with larger organizations.

How an LLP (Limited Liability Partnership) Works?

1. Hybrid Business Structure

A Limited Liability Partnership (LLP) is a flexible business structure that operates with a mix of partnership and corporate elements.

2. Limited Liability Advantage

The main advantage of an LLP is that it provides limited liability to its partners. This means that, unlike a general partnership, your personal assets (such as your home or car) are typically protected in case of legal action.

3. Lawsuit and Liability Rules

In an LLP, if the business faces a lawsuit, the partnership itself becomes the primary target, not the personal property of the individual partners. However, if a partner personally engages in wrongdoing (e.g., fraud), they could still be held liable for their actions.

4. Example: Meena and Shalini’s Case

  • Starting Out: Consider a scenario where two professionals, Meena and Shalini, decide to start a business offering consulting services in India. They have a shared interest in providing management consulting to small and medium enterprises (SMEs). Initially, they start with a mutual agreement and an informal arrangement.
  • Formalizing the Structure: However, as the business grows, they realize the need to formalize the structure to protect themselves from legal and financial risks. Meena and Shalini choose to form an LLP (Limited Liability Partnership) to safeguard their personal assets from any potential legal liabilities that may arise in the course of business. They register the LLP with the Ministry of Corporate Affairs (MCA) in India, creating an LLP agreement that outlines their responsibilities, profit-sharing ratios, and other operational details.
  • Facing a Legal Dispute: A few months later, the consulting firm faces a legal dispute due to an issue with one of their clients. The client sues the LLP for professional negligence, claiming that the advice given led to a loss in business.
  • Outcome of the Lawsuit: Since Meena and Shalini have formed an LLP, their personal assets—such as their homes, personal savings, or vehicles—are protected. The lawsuit can only target the assets of the LLP itself, not their personal belongings. However, if it is proven that either Meena or Shalini acted negligently or fraudulently in a personal capacity, that partner could still be held accountable for their individual actions.

LP (Limited Partnership) vs General Partnership

An LP (Limited Partnership) and a General Partnership are both business structures involving two or more partners, but they differ in terms of liability and management roles.

Limited Partnership (LP)

  • In an LP, there are two types of partners: general partners and limited partners.
  • General partners have full control over the management of the business and bear unlimited liability, meaning they are personally responsible for the business's debts and obligations.
  • Limited partners, on the other hand, contribute capital but do not participate in day-to-day management. Their liability is limited to the amount they invest in the business, protecting their personal assets beyond that contribution.

General Partnership

  • In a General Partnership, all partners share equal responsibility for managing the business and have unlimited liability.
  • This means they are personally liable for the debts and obligations of the business.
  • There is no distinction between the roles of partners—each partner participates in both the management and the liabilities of the business.

Key Difference

The key difference between the two is the level of liability protection and management involvement.

  • An LP offers limited liability to some partners (limited partners).
  • A General Partnership places full responsibility on all partners, making it a riskier option for individuals seeking protection from personal liability.

Related Read: What is the Difference Between LLP and Partnership?

LLP vs LLC

Ownership and structure

LLP refers to Limited Liability Partnership, where two or more partners collaborate to run the business. The partners can be individuals or corporate entities, and the number of partners can vary.

In an LLP, all partners share the management responsibilities and decision-making processes, unless the partnership agreement specifies otherwise. Partners have limited liability, meaning their personal assets are protected from business debts or legal claims.

LLC refers to a Limited Liability Company, which is a separate legal entity that can have one or more owners, known as members. The ownership can be divided among individual or corporate members, and the structure is more flexible than a corporation.

LLCs can be managed either by members (member-managed) or by designated managers (manager-managed). The members are not personally liable for the company’s debts or liabilities, providing them with protection similar to that of an LLP.

Liability protection

Partners in an LLP enjoy limited liability, meaning they are not personally liable for the debts or obligations of the business beyond their contribution to the partnership. However, if a partner engages in fraudulent or wrongful activities, they could still be personally liable for their actions.

LLC members also have limited liability, meaning they are generally not personally responsible for the company’s debts or liabilities. The LLC itself is a separate legal entity, so any financial obligations fall on the company, not the individual members. Similar to an LLP, members are protected unless they personally guarantee a debt or engage in illegal activities.

Decision making and management

In an LLP, all partners typically have a say in the management and operation of the business, unless otherwise specified in the LLP agreement. It is a more flexible structure in terms of decision-making since there is no requirement for a formal management team.

LLCs can be either member-managed or manager-managed. In a member-managed LLC, all members participate in managing the business, while in a manager-managed LLC, the members appoint managers to run the operations. This offers more structure compared to an LLP, especially for larger businesses.

Ownership transfer

Ownership in an LLP is typically not as easily transferable as in an LLC. Partners usually need to approve the admission of new partners or the transfer of ownership. This limits the liquidity and transferability of ownership interests.

Ownership in an LLC can be transferred more easily than in an LLP, depending on the terms of the operating agreement. LLCs can issue membership interests that can be bought or sold, making it easier to bring in new investors or transfer ownership.

LLP vs LP

An LP refers to a Limited Partnership, which is different from an LLP.

An LLP (Limited Liability Partnership) and an LP (Limited Partnership) are both business structures that involve multiple partners but differ in terms of liability and management.

In an LLP, all partners share equal responsibility for managing the business and enjoy limited liability, meaning their personal assets are protected from business debts. However, all partners are involved in decision-making unless specified otherwise in the agreement.

In contrast, an LPconsists of general partners and limited partners. General partners manage the business and have unlimited liability, while limited partners are only liable up to the amount of their investment and do not participate in the day-to-day operations.

The key difference lies in the roles and liabilities of the partners. In an LLP, all partners have equal liability protection and management control, whereas, in an LP, the general partners hold the management responsibility and are personally liable, while limited partners have liability protection but no management involvement.

The choice between the two structures depends on the desired level of involvement in business operations and the type of liability protection needed.

What are the advantages of LLP?

Wondering why you should choose LLP over other business registrations? Have a look:

  • Easy & quick to build: Building an LLP is a simple process. It does not have complicated steps and requirements and neither does it take months of waiting time. The minimum amount of fees for incorporating an LLP is INR 500 and the maximum that can be spent is INR 5,600
  • Continuity in succession: The life of the LLP is not affected by the death or retirement of any of the partners. If one of the partners withdraws because of any reasons, it does not mean that the LLP gets wound up. An LLP can only be shut down on the basis of the provisions of the Limited Liability Protection Act  of 2008
  • Limited liability: All the partners of the LLP have limited liability, which means that the partners are not liable to pay the debts of the company from their personal assets. No partner is responsible for any other partner’s misbehaviour or misconduct
  • Streamlines management: All the major decisions and management activities in an LLP are taken care of by the board of directors hence the shareholders receive very less power in making decisions
  • Hassle-free transfers: There are no restrictions on joining and leaving an LLP. One can easily admit as a partner and transfer the ownership to others
  • Taxation benefits: An LLP is exempt from various taxes such as dividend distribution tax and minimum alternative tax. Also, the rate of tax is less when compared to other business types
  • No compulsory audit requirements: There is no mandatory audit requirement for an LLP until the company exceeds the annual turnover of INR 40 lakhs

What are the disadvantages of LLP?

  • Not covered in all States: In India, there are certain variations in tax benefits from State to State. There are also cases when States restrict the formation of LLP. This is one of the major disadvantages of an LLP
  • Less credibility: An LLP has many benefits but the fact is that people do not consider LLPs to be a credible business. People still trust companies or partnerships over LLPs
  • Differences amongst partners: Since each partner is responsible for their own part, there are cases when partners do not consult each other before proceeding with a decision or agreement
  • Transfer of interest: Though interest and ownership can be transferred, it usually is a long procedure. Various formalities are required to comply with the provisions of the Limited Liability Partnership Act

Related Read: LLP Advantages and Disadvantages

Documentation requirements for registering an LLP (2025)

Before you start with the procedure of registering an LLP or make changes in an existing LLP, have a look at the list of documents you might need:

  • Form 7 is required to obtain a Designated Partner Identification Number (DIN) while registering your LLP. It may be sought from the MCA website. Along with the duly completed form, a registration fee of INR 100 must also be paid
  • Form 1/ RUN-LLP is required to register a name for the LLP and reserve it. It may be used to christen an LLP or to alter the present name. The fee for submitting this form is Rs 10,000
  • A request must also be filed by the partners for their DSC to be registered if it hasn’t already been done before
  • Form 2/FiLLiP is required for incorporating a registered LLP. This form must be sent to and acknowledged by the concerned State’s Registrar
  • An LLP agreement must be made, which outlines the duties of each partner involved. This requires the filling and submitting of Form 3
  • In the case of changing, altering, adding or removing partners, the partners must submit Form 4
  • Form 11 must be used to file the IT returns of the LLP
  • If the office address of the LLP is to be changed, then Form 15 must be filed

How to form a Limited Liability Proprietorship

As mentioned earlier, forming an LLP is easy and quick. Before you get started, obtain a DSC or Digital Signature Certificate as the following steps will require it. File for one if you don’t already have one. Further, here are the steps involved in forming an LLP. You can visit mca.gov.in and follow the steps listed below:

  1. Issue a Designated Partner Identification Number for yourself, which serves as an ID card
  2. File Form 7 and pay the required fees
  3. Register a name for your LLP using Form 1 and pay Rs 200
  4. Incorporate the LLP via Form 2. The LLP agreement must also be made at this stage
  5. File the LLP Agreement as per Section 2(o) of the LLP Act, 2008 using Form 3

With the above-mentioned steps, you are all set to start an LLP of your own.

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What should an LLP agreement include?

Typical clauses cover the registered office, business nature, rights and duties of partners, contributions and profit-sharing, voting rights, process for adding or removing partners, transfers, and dispute resolution mechanisms.

Who can become a partner, and what are the rules around it?

  • A minimum of two partners is required. If the number drops below two for over six months, the remaining partner can be held personally liable.
  • Partners can be individuals or corporations. Foreign partners must adhere to FDI norms and make contributions through approved banking channels at fair market value.
  • What are the compliance obligations for LLPs?

    Every LLP must file:

    • Form 8 (Statement of Account & Solvency), and
    • Form 11 (Annual Return)
      within 60 days from the end of the financial year (by May 30th for FY ending March 31).

    How is an LLP taxed?

    LLPs are taxed at a flat rate of 30% (plus surcharge and cess). They are exempt from dividend distribution tax, and partners are taxed individually when profits are distributed.

    Can existing businesses convert to an LLP?

    Yes, existing structures like private companies or partnership firms can convert to an LLP by following specific processes laid out in the LLP Act.

    Swagatika Mohapatra

    Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

    Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

    Read more
    10 Advantages of Incorporating a Company: Why You Should Incorporate Your Business

    10 Advantages of Incorporating a Company: Why You Should Incorporate Your Business

    In today's competitive business landscape, entrepreneurs are constantly seeking ways to establish a strong foundation for their ventures. One crucial decision that can significantly impact the growth and success of a business is the choice to register as a company. Company registration offers a multitude of advantages that can propel your enterprise to new heights. In this article, we will delve into the top 10 benefits of registering a company, empowering you to make an informed decision for your business's future.

    Table of Contents

    What are the Benefits of Company Incorporation in India?

    Registering a company in India comes with a host of advantages that can elevate your business to new levels of success. From enhanced credibility to legal protection and access to funding, company registration provides a solid foundation for growth. Let's explore these benefits in more detail.

    1. Legal Entity

    One of the primary benefits of business registration is that the company becomes a separate legal entity. Under the Companies Act, a registered company is considered an artificial person, distinct from its directors and shareholders. This means that upon incorporation, the company acquires its legal personality, allowing it to own property, incur debts, and engage in legal proceedings under its name.

    The concept of a separate legal entity provides several advantages:

    • The company can enter into contracts and agreements independently
    • It can sue or be sued in its name
    • The company's assets and liabilities are separate from those of its owners
    • The company's existence is not tied to the lifespan of its members

    This legal separation is crucial for protecting the personal assets of the company's owners, as they are not personally liable for the company's debts or legal obligations.

    2. Perpetual Succession

    Company registration ensures perpetual succession, which is a significant advantage for businesses. Perpetual succession means that the company's existence continues indefinitely, regardless of any changes in its membership, staff, or shareholders. This stability is a key benefit of incorporating a business, as it ensures that the company can outlast individual members or leadership changes.

    Here are some key points about perpetual succession:

    • The company's existence is not affected by the death, retirement, or resignation of its members
    • Shares can be transferred without disrupting the company's operations
    • The company remains operational until it is legally dissolved
    • Perpetual succession allows for long-term planning and execution of business strategies

    By incorporating your business, you create a stable and enduring entity that can withstand changes in ownership and management, providing a solid foundation for growth and success.

    3. Limited Liability

    Limited liability is one of the most significant benefits of registering a private limited company. In a registered company, the shareholder's assets are protected from the company's debts and legal obligations. This means that in the event of financial losses or legal issues, the shareholders are only liable to the extent of their investment in the company.

    Key points about limited liability:

    • Shareholders' assets (e.g., houses, cars, bank accounts) are safeguarded
    • Directors are not personally liable for the company's debts or legal liabilities
    • Limited liability encourages entrepreneurship and risk-taking
    • It provides a layer of protection for business owners

    In contrast, sole proprietors and partners in unregistered businesses are personally liable for all business debts and obligations, putting their assets at risk. Limited liability is a crucial advantage of company registration, offering peace of mind and financial security for business owners.

    4. Free & Easy Transferability of Shares

    One of the advantages of incorporation of a company is the free and easy transferability of shares. In a registered company, shares can be transferred from one shareholder to another without affecting the company's operations. This flexibility in ownership transfer is a significant benefit, particularly for growing businesses.

    Here are some key aspects of share transferability:

    • Public companies: Shares are freely transferable, and shareholders can sell their shares to anyone without restrictions.
    • Private companies: While share transfer is possible, there may be some restrictions imposed by the company's bylaws or shareholder agreements.
    • The transfer process typically involves a signed share transfer form and the handover of the share certificate to the buyer.
    • Easy share transferability allows for smooth succession planning and exit opportunities for shareholders.

    Free share transfer attracts investors, raises capital, and enables ownership changes without disrupting operations.

    5. Owning Property

    As a separate legal entity, a registered company can acquire, own, and transfer property in its name. This is a significant advantage of company registration, as it distinguishes the company's assets from those of its shareholders. Shareholders do not have direct ownership rights over the company's property; instead, their interest lies in the shares they hold.

    Key points about company property ownership:

    • The company can purchase, lease, or sell property independently
    • Shareholders' personal assets are protected from claims against the company's property
    • The company's property remains an exclusive asset of the company, not its individual members
    • Owning property in the company's name can provide tax benefits and asset protection

    By owning property as a separate legal entity, a registered company can secure its assets, attract investors, and create a stable foundation for long-term growth and success.

    6. Can Sue or Be Sued

    Another advantage of company registration is that a registered company can sue or be sued in its name. As a separate legal entity, the company has the right to initiate legal proceedings or defend itself against legal claims, just like an individual. This ability to engage in legal matters independently is a crucial aspect of a company's legal status.

    Key points about a company's legal standing:

    • The company can file lawsuits to protect its interests, such as intellectual property rights or breach of contract
    • It can defend itself against legal claims without involving its shareholders or directors personally
    • The company's legal actions remain separate from the personal legal matters of its members
    • This legal independence helps maintain the company's professional reputation and protects its shareholders

    The ability to sue or be sued in its name provides a registered company with the necessary legal tools to safeguard its interests, resolve disputes, and maintain its professional standing in the business world.

    7. Dual Relationship

    One of the unique advantages of incorporation of company is the ability to have a dual relationship with its members. In a registered company, an individual can simultaneously hold multiple roles, such as being a shareholder, creditor, director, and employee. This flexibility allows for a more complex and adaptable business structure.

    Key points about dual relationships in a company:

    • A person can be a shareholder and an employee at the same time
    • Directors can also be shareholders, allowing for a more vested interest in the company's success
    • Shareholders can provide loans to the company, becoming creditors while maintaining their ownership stake
    • These dual roles are legally permissible and common in registered companies

    A dual relationship with the company fosters ownership, commitment, and multi-role contributions to its success.

    8. Borrowing Capacity

    Company registration significantly enhances a business's borrowing capacity. Registered companies have access to a wider range of financing options compared to sole proprietorships or partnerships. This increased borrowing capacity is a crucial advantage for businesses looking to expand, invest in new projects, or maintain financial stability.

    Key points about a company's borrowing capacity:

    • Companies can issue debentures to raise capital from the public
    • Registered companies are seen as more credible and stable by banks and financial institutions
    • Larger financial assistance is available to companies, making borrowing more accessible
    • Companies can secure loans by offering their assets as collateral

    Company registration boosts borrowing capacity, enabling growth, expansion, and operational stability for a competitive edge.

    9. Equity Raising

    Another significant advantage of company registration is the ability to raise equity funding. Registered companies, particularly private limited companies, have access to a broader pool of investors and can attract equity investments from various sources. This equity raising potential is crucial for businesses looking to expand, scale operations, and increase their market presence.

    Key points about equity raising in a registered company:

    • Private limited companies can attract investments from angel investors and private equity firms
    • Equity funding provides growth capital without the burden of debt repayment
    • Public limited companies can raise funds through initial public offerings (IPOs) and list their shares on stock exchanges
    • Equity investments often come with strategic partnerships and valuable industry connections

    The ability to raise equity funding through company registration opens up new avenues for business growth, allowing companies to tap into the expertise and resources of investors while maintaining control over their operations.

    10. Brand Building

    Company registration plays a vital role in brand building and establishing a strong business identity. By registering your company, you create a distinct and recognizable brand that sets you apart from competitors. A registered company name provides legal protection and prevents others from using a similar name, safeguarding your brand's uniqueness.

    Key points about brand building through company registration:

    • A registered company name adds credibility and professionalism to your brand
    • It helps build trust among customers, suppliers, and partners
    • Legal protection for your brand name reduces the risk of confusion and infringement
    • A strong brand identity attracts customers, investors, and top talent

    Registering a company builds a strong, lasting brand and sets the foundation for long-term success.

    What Does Online Company Registration Entail?

    The Companies Act of 2013 has made the process of company registration more streamlined and accessible through online means. The process involves several steps, including:

    Key points about brand building through company registration:

    1. Selecting the type of company (Private Limited, Limited Liability Partnership, etc.)
    2. Applying for a Director Identification Number (DIN)
    3. Obtaining Digital Signature Certificates (DSC)
    4. Filing the necessary forms with the Ministry of Corporate Affairs (MCA)

    It is crucial to verify the availability of the desired company name and ensure compliance with legal requirements throughout the registration process.

    Types of Companies You Can Register

    The Companies Act of 2013 provides for various types of companies that can be registered, each with its own characteristics and requirements. Some of the common types include:

    1. Private Limited Company: A company with a minimum of two and a maximum of 200 shareholders, with restrictions on the transfer of shares.
    2. Public Limited Company: A company that can have an unlimited number of shareholders and can offer shares to the public.
    3. One Person Company (OPC): A company with a single shareholder and director, suitable for solo entrepreneurs.
    4. Limited Liability Partnership (LLP): A partnership structure that provides limited liability to its partners.
    5. Section 8 Company: A non-profit company formed for charitable or social purposes.

    Choosing the right type of company depends on factors such as business size, goals, and structure.

    Conclusion

    Registering a company is a strategic decision that offers numerous advantages for businesses. From limited liability protection to enhanced credibility and access to funding, company registration provides a solid foundation for growth and success. By understanding the benefits of company registration, entrepreneurs can make informed decisions and position their ventures for long-term prosperity.

    Frequently Asked Questions

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    Register your Business at just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Private Limited Company in just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your One Person Company in just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Business starting at just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Limited Liability Partnership in just 1,499 + Govt. Fee

    Register your business

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    One Person Company
    (OPC)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Freelancers, Small-scale businesses
    • Businesses looking for minimal compliance
    • Businesses looking for single-ownership

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    One Person Company
    (OPC)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Freelancers, Small-scale businesses
    • Businesses looking for minimal compliance
    • Businesses looking for single-ownership

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    Frequently Asked Questions

    What benefits does online registration offer compared to offline registration of a company

    • Online registration streamlines the process, making it faster and more convenient.
    • It eliminates the need for physical submission of documents, saving time and effort.
    • Online registration allows for real-time tracking of the application status.

    How does online company registration simplify the process and help save time?

    • Online registration enables entrepreneurs to complete the process from anywhere, at any time.
    • Digital submission of documents eliminates the need for physical visits to government offices.
    • The online system guides users through the process, minimizing errors and delays.

    Can there be cost benefits to registering a company online?

    • Online registration often comes with reduced fees compared to offline methods.
    • It eliminates the need for intermediaries or agents, saving on additional costs.
    • Digital submissions reduce paperwork and associated expenses.

    What assistance and resources can be found when registering a company online?

    • Online portals often provide step-by-step guides and tutorials for the registration process.
    • FAQs and help sections address common queries and concerns.
    • Customer support is usually available through email, chat, or telephone for assistance.

    How safe is the online company registration process?

    • Online registration portals, such as the MCA portal, employ secure encryption and data protection measures to ensure the safety of sensitive information.
    • The use of Digital Signature Certificates (DSC) adds an extra layer of security and authentication to the process.
    • Reputable online service providers adhere to strict data privacy and security standards to safeguard client information.

    Swagatika Mohapatra

    Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

    Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

    Read more
    How Do I Start My Own Online Business? A Step-by-Step Guide

    How Do I Start My Own Online Business? A Step-by-Step Guide

    Starting your own online business in India requires careful planning and strategic action. First, you'll need to select a niche that aligns with your skills and market demand. Conduct thorough market research to understand your target audience and competition. Next, focus on building a strong online presence through a website or e-commerce platform. Ensure that you set up reliable customer service channels to foster trust and satisfaction. As you go through the process, remember that dedication and consistent effort are key to success. 

    Table of Contents

    Procedure to Start an Online Business

    Step 1: Identify Your Business Idea

    How do I choose the right online business idea?

    Choosing the right online business idea starts with understanding your own strengths. Think about your skills, hobbies, and what you’re passionate about. Also, assess market demand to ensure that your idea addresses a genuine need. You can brainstorm by asking yourself what problems you can solve or how your expertise can benefit others.

    What are the most profitable online business ideas?



    Some of the most profitable online business ideas include e-commerce, dropshipping, freelancing, selling digital products, and affiliate marketing. These options require relatively low investment and have high growth potential in India. E-commerce and dropshipping are ideal for those interested in retail, while freelancing and digital products are great for service-oriented entrepreneurs.

    How do I validate my business idea?

    To validate your business idea, you should conduct market research and competitor analysis. This helps you understand if there’s demand for your product or service and how to position yourself in the market. Additionally, you can run surveys or test your idea on a small scale to gather feedback before fully committing to it.

    Step 2: Conduct Market Research

    Why is market research important for an online business?

    Market research is crucial for understanding your target audience and the competition. It helps you identify customer needs, preferences, and pain points, allowing you to tailor your offerings effectively. By knowing what your competitors are doing, you can find gaps in the market and differentiate your business. This research forms the foundation for making informed decisions and reducing risks.

    How do I conduct market research?

    To conduct market research, start by using tools like Google Trends and keyword research tools (e.g., SEMrush, Ubersuggest) to identify trending topics and search volumes. You can also use social media insights to monitor conversations around your niche. Engaging directly with potential customers through surveys or focus groups will also give you valuable feedback.

    What are the key metrics to analyse?

    Key metrics to analyse include customer demographics, such as age, gender, location, and income level. Understanding buying behaviour, including purchase frequency and preferences, is equally important. Additionally, assessing the market size, competition, and growth potential helps you gauge the sustainability of your business idea.

    Step 3: Create a Business Plan

    Do I need a business plan for an online business?

    Yes, a business plan is essential for an online business. It provides clarity on your goals and how you plan to achieve them. A solid business plan also plays a key role when seeking funding, as it helps potential investors or lenders understand the vision, strategy, and financial viability of your business.

    What should a business plan include?

    Your business plan should include the following sections:

    1. Executive Summary: A brief overview of your business, mission, and vision.
    2. Target Market: A detailed description of your ideal customers and their needs.
    3. Revenue Model: A breakdown of how you’ll make money (e.g., product sales, subscriptions, services).
    4. Marketing Strategy: A plan for how you'll promote your business, including online advertising, social media, and SEO.

    How do I set realistic goals?

    To set realistic goals, follow the SMART criteria:

    1. Specific: Define clear, concise goals.
    2. Measurable: Ensure your progress can be tracked.
    3. Achievable: Set goals that are realistic given your resources.
    4. Relevant: Ensure the goals align with your business objectives.
    5. Time-bound: Assign deadlines to keep you on track. Setting SMART goals helps maintain focus and ensures steady progress.

    Step 4: Choose a Business Model

    What are the different online business models?

    1. E-commerce: Selling physical or digital products through an online store.
    2. Subscription-based: Offering products or services on a recurring basis, such as monthly subscriptions for digital content or curated boxes.
    3. Service-based: Providing services like consulting, coaching, or freelance work directly to customers.
    4. Ad-based: Earning revenue through advertising, typically via websites or social media platforms that attract large audiences.

    Which business model is best for beginners?

    For beginners, a service-based model or a subscription-based model might be the best fit. The service model often requires lower initial investment and offers flexibility in terms of workload. The subscription model provides recurring revenue, which can be predictable once you have a customer base. However, each model has its pros and cons:

    1. E-commerce: High investment, but potential for significant profit.
    2. Subscription-based: Steady income but may require strong marketing efforts.
    3. Service-based: Low cost to start, but time-intensive and dependent on personal expertise.
    4. Ad-based: Relatively low start-up cost, but requires a large audience and can take time to generate income.

    How do I decide which model suits me?

    To decide on the best business model, align your choice with your skills, budget, and long-term goals. If you have a skill set that can be marketed as a service (e.g., writing, design, tutoring), a service-based model might be a good start. If you want to sell products but have a limited budget, dropshipping or print-on-demand models may be better. Consider your available resources and the time you can commit before making your final decision.

    Step 5: Register Your Business

    Do I need to register my online business?

    Yes, registering your online business is crucial for legal and tax purposes. It provides your business with a legal identity, ensures compliance with local regulations, and helps build credibility with customers. Without registration, you might face legal issues and be unable to access benefits like business loans or grants.

    H4 - What are the steps to register a business?

    1. Choose a business name: Make sure it reflects your brand and is unique.
    2. Decide on a legal structure: Select the appropriate business structure (sole proprietorship, LLC, Private Limited, etc.).
    3. Register for taxes: Apply for a Goods and Services Tax (GST) number if applicable.
    4. Obtain required licenses: Depending on your business type, you may need specific licenses or permits.
    5. Open a business bank account: This helps separate personal and business finances.
    6. Get a business PAN (Permanent Account Number): Required for tax filings and business transactions.

    What legal structure should I choose?

    Choosing the right legal structure depends on factors like liability, taxes, and scalability:

    1. Sole Proprietorship: Simple to set up, ideal for solo entrepreneurs, but you’ll be personally liable for business debts.
    2. Limited Liability Partnership (LLP): Offers limited liability protection and is suitable for small businesses with partners.
    3. Private Limited Company: A more complex structure that provides limited liability and is better suited for larger businesses looking for investment or expansion. It also offers tax benefits and more credibility.

    Related Read: Difference between Private Limited Company and One Person Company

    Step 6: Build Your Online Presence

    How do I create a website for my business?

    1. Choose a domain name: Pick a name that reflects your business and is easy to remember. Check for availability using domain registrars like GoDaddy or Hostinger.
    2. Select a hosting provider: Choose a reliable hosting service, such as Bluehost or SiteGround, to ensure your website runs smoothly.
    3. Use website builders: Website builders like WordPress and Shopify are user-friendly and offer templates for quick setup. WordPress is ideal for blogs and content-focused websites, while Shopify is perfect for e-commerce stores.

    Do I need social media for my online business?

    Yes, social media is crucial for marketing and customer engagement. Platforms like Facebook, Instagram, and LinkedIn help you reach a wider audience and build brand awareness. Social media allows you to connect with customers, share updates, promote products, and gather feedback. It’s an affordable way to drive traffic to your website and create a loyal community around your brand.

    What are the essential features of a business website?

    1. User-friendly design: A clean, easy-to-navigate layout that enhances the user experience.
    2. Secure payment gateways: Integrated payment gateway (e.g. Razorpay) to facilitate safe and smooth transactions.
    3. Mobile responsiveness: Your website should be fully optimised for mobile devices, as many users shop and browse on their phones.

    Step 7: Set Up Payment and Shipping Systems

    H4 - How do I accept payments online?
    To accept payments online, you need to integrate a reliable payment gateway into your website. Payment gateways like PayPal, Stripe, and Razorpay allow you to process credit card payments, debit cards, and digital wallets securely. The setup process usually involves creating an account with the provider, linking it to your business bank account, and adding their payment gateway to your website using plugins or APIs. 

    What are the best shipping options for an online store?

    1. Self-shipping: If you’re a small business, you can handle shipping yourself by partnering with courier services like India Post, DTDC, or Blue Dart. This gives you more control but requires time and resources.
    2. Third-party logistics (3PL): 3PL companies manage storage, packaging, and delivery on your behalf. This is ideal for businesses that want to scale quickly without handling logistics.
    3. Dropshipping: This model eliminates the need for inventory management. When a customer places an order, the product is directly shipped from the supplier. It’s cost-effective, but you have less control over shipping times and quality.

    How do I handle international payments and shipping?

    1. Payments: Use global payment gateways like PayPal or Razorpay, which support multiple currencies. You’ll need to set up your account to handle cross-border payments and be aware of transaction fees and exchange rates.
    • Shipping: Partner with international couriers like DHL or FedEx for global shipping. Ensure that you account for customs duties, taxes, and potential delays. Consider using platforms like Shiprocket or Easyship, which can automate international logistics and offer competitive shipping rates.

    Step 8: Market Your Online Business

    How do I promote my online business?

    1. SEO (Search Engine Optimisation): Optimise your website for relevant keywords, improve loading speeds, and focus on creating quality content to rank higher in search engines.
    2. Social Media Marketing: Use platforms like Instagram, Facebook, and LinkedIn to engage with your audience, share valuable content, and promote offers.
    3. Email Marketing: Build an email list and send newsletters, promotional offers, or product updates to keep customers engaged.
    4. Paid Ads: Run ads on Google, Facebook, or Instagram to increase brand visibility and attract potential customers. Paid advertising can generate quick results if targeted effectively.

    What is the best way to attract customers?

    1. Content Marketing: Create blog posts, videos, or infographics that provide value to your audience and establish your brand as an authority in your niche.
    2. Influencer Collaborations: Partner with influencers in your industry to promote your products or services, leveraging their established trust and following.
    3. Customer Reviews: Encourage satisfied customers to leave reviews and testimonials. Positive feedback can build credibility and influence potential customers' purchasing decisions.

    How do I track the success of my marketing efforts?

    To track the success of your marketing efforts, use tools like:

    1. Google Analytics: Monitor website traffic, user behaviour, and conversion rates. Google Analytics gives you detailed insights into your website’s performance.
    2. Social Media Insights: Platforms like Facebook, Instagram, and Twitter provide analytics on engagement, reach, and audience demographics, helping you assess the effectiveness of your social media campaigns. These tools can help you fine-tune your marketing strategies and ensure that your efforts are yielding the desired results.

    Step 9: Manage Operations and Scale

    How do I manage day-to-day operations?
    To manage day-to-day operations effectively, use tools that streamline tasks:

    1. Inventory Management: Tools like TradeGecko or Zoho Inventory help track stock levels, manage orders, and avoid overselling.
    2. Customer Support: Platforms like Zendesk or Freshdesk assist in managing customer inquiries, complaints, and service requests efficiently.
    3. Order Tracking: Use tools like Shiprocket or AfterShip to monitor and update customers on the status of their orders in real-time, improving their experience.

    When should I consider scaling my business?

    1. Consistent Revenue Growth: When your sales show a steady increase over a few months or years, it indicates that your business model is working.
    2. High Customer Demand: If customers are requesting more products or services than you can provide, or if you’re struggling to meet demand, it’s a clear sign that you’re ready to expand.
    3. Positive Cash Flow: If you have a healthy profit margin and can reinvest earnings back into the business, scaling becomes a feasible option.
    • What are the best ways to scale an online business?
    1. Expand Product Lines: Add complementary products or services to cater to a broader audience or meet existing customer needs.
    2. Enter New Markets: Consider selling to customers in different regions, cities, or even internationally to broaden your reach.
    3. Automate Processes: Use automation tools for marketing (e.g., Mailchimp for emails), customer support (e.g., chatbots), and order fulfilment to reduce the workload and enhance efficiency. By scaling smartly, you can increase your reach and profitability without compromising the quality of your offerings.

    Registration of Online Business in India

    • Choose a suitable business structure: Decide whether to register as a Sole Proprietorship, LLP, or Private Limited Company based on your business model, scalability needs, and compliance requirements.
    • Select a unique business name: Check name availability on the Ministry of Corporate Affairs (MCA) portal and register it to avoid legal issues.
    • Apply for PAN and TAN: A Permanent Account Number (PAN) is required for financial transactions. At the same time, a Tax Deduction and Collection Account Number (TAN) is mandatory if your business deducts taxes at the source.
    • Register for GST: If your annual turnover exceeds ₹40 lakhs (₹20 lakhs for special category states), you must register for Goods and Services Tax (GST) to collect and pay taxes legally.
    • Register under MSME if applicable: If you own a small or medium-sized business, registering under the Udyam (MSME) scheme can provide benefits like easier loan approvals and government subsidies.
    • Obtain necessary licenses and permits: Depending on your industry, you may need specific licenses, such as an FSSAI license for food businesses, a trade license for local operations, or an Import Export Code (IEC) for international trade.
    • Open a business bank account: A separate bank account in your business name is required for handling payments, tax filings, and financial transactions professionally.

    {{company-reg-cta}}

    Tips to Start an Online Business in India

    • Identify a Profitable Niche

      Selecting the right niche is important for success. Focus on a business idea that matches your skills and interests while also having strong market demand. Research your competitors to find opportunities where you can stand out.
    • Build a Strong Online Presence
      Creating a website or an e-commerce store is essential for any online business. Make sure your website is easy to use, mobile-friendly, and optimised for search engines. Use social media to connect with your audience and promote your products or services.
    • Ensure Legal Compliance
      Every online business must comply with the legal requirements for online business in India to operate lawfully. You need to register your business and get GST registration in India. It is also important to comply with tax and other regulations. Completing these formalities ensures smooth operations and avoids legal issues. 
    • Set Up Secure Payment Systems

      Providing a secure and convenient payment method builds customer trust. Choose a reliable payment gateway that supports multiple payment options and ensures smooth transactions for your customers.

    Frequently Asked Questions

    rize image

    Register your Business at just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Private Limited Company in just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your One Person Company in just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Business starting at just 1,499 + Govt. Fee

    Register your business
    rize image

    Register your Limited Liability Partnership in just 1,499 + Govt. Fee

    Register your business

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    One Person Company
    (OPC)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Freelancers, Small-scale businesses
    • Businesses looking for minimal compliance
    • Businesses looking for single-ownership

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    One Person Company
    (OPC)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Freelancers, Small-scale businesses
    • Businesses looking for minimal compliance
    • Businesses looking for single-ownership

    Private Limited Company
    (Pvt. Ltd.)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    1,499 + Govt. Fee
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    Frequently Asked Questions

    Which business is most profitable?

    Profitable online businesses in India include e-commerce, dropshipping, freelancing, digital marketing services, and selling digital products like courses or eBooks. Choosing the right business depends on your skills, market demand, and investment capacity.

    What are the 7 steps to starting a business?

    The key steps to start an online business include:

    1. Choosing a business idea that suits your skills and interests.
    2. Conducting market research to understand demand and competition.
    3. Deciding on the business structure (like sole proprietorship, LLC, etc.).
    4. Registering your business and completing necessary legal formalities.
    5. Building a website or online store to showcase your products or services.
    6. Setting up payment systems to process transactions securely.
    7. Planning your marketing strategy and ensuring good customer service.

    Which business can we do from home?

    Home-based businesses include freelancing, content writing, selling handmade products, affiliate marketing, and running an e-commerce business in India. Many of these require minimal investment and can be scaled over time.

    Swagatika Mohapatra

    Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

    Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

    Read more

    Rize.Start

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    Basanth Verma
    shopeg.in
    Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
    @foxsellapp
    #razorpayrize #rizeincorporation
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    Prakhar Shrivastava
    foxsell.app
    We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

    #entrepreneur #tbsmagazine #rize #razorpay #feedback
    Dhaval Trivedi
    TBS Magazine
    Hey, Guys!
    We just got incorporated yesterday.
    Thanks to Rize team for all the Support.
    It was a wonderful experience.
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