How to Convert a Proprietorship into a Private Limited Company in India

Jul 28, 2025
Private Limited Company vs. Limited Liability Partnerships

Starting as a sole proprietorship is common among freelancers, consultants, and early-stage entrepreneurs. It’s simple, cost-effective, and easy to manage. But as a business grows, so do the legal, financial, and operational complexities — and that’s when many founders consider converting their proprietorship into a Private Limited Company (Pvt Ltd).

In this blog, we break down everything you need to know about this transition — from legal formalities and document requirements to step-by-step procedures and benefits like limited liability and better access to funding.

Table of Contents

What is Proprietorship?

A sole proprietorship is the simplest form of business where a single individual owns, operates, and manages the business. It isn’t a separate legal entity, meaning the owner and the business are legally identical.

Key Characteristics:

  • Full ownership and control: The proprietor has complete control over decisions.
  • Unlimited liability: The owner is personally liable for all business debts and losses.
  • No formal registration: In many cases, registration is optional, though GST or local licenses may be required.
  • Limited access to capital: Raising funds from investors or banks is difficult due to a lack of legal status.
  • Common use cases: Freelancers, small shop owners, consultants, and home-based businesses.

What is a Private Limited Company?

A Private Limited Company is a legally registered business entity under the Companies Act, 2013. It offers a distinct legal identity and limits the liability of shareholders to the amount invested in the company.

Key Features:

Following are the key features of a private limited company:

  • Separate legal entity from its owners
  • Limited liability for all shareholders
  • Minimum 2 and maximum 200 shareholders
  • Perpetual succession – continues to exist regardless of changes in ownership
  • Preferred for scaling due to ease of raising funds, better governance, and investor confidence

Ready to convert your business? Get expert assistance with company registration and start your private limited journey today.

Difference Between Proprietor and Private Limited Company

Form Purpose Applicable To Due Date
MSME-1 Reporting outstanding payments to MSMEs > 45 days All specified companies 30.04.2025 (Oct–Mar) 31.10.2025 (Apr–Sep)
NDH-3 Half-yearly return filing for Nidhi companies Nidhi companies 30.04.2025 (Oct–Mar) 30.10.2025 (Apr–Sep)
Form-11 (LLP) Annual return of LLP with business and partner details All registered LLPs 30.05.2025
FC-4 Annual return of foreign company Foreign companies 30.05.2025
NDH-1 Return of statutory compliances Nidhi companies (as applicable) 29.06.2025
DPT-3 Reporting deposits and loans Every company 30.06.2025
PAS-6 Share Capital Audit Report Reconciliation Unlisted public companies 30.05.2025 (Mar) 29.11.2025 (Sep)
FLA Annual return to RBI for FDI/ODI holders Companies with FDI/ODI 15.07.2025
DIR-3 KYC KYC of Directors/DPs All DIN/DPIN holders as on 31.03.2025 30.09.2025
FC-3 Filing annual accounts of foreign company Foreign companies’ branches, liaison, and project offices 31.12.2025
CRA-2 Appointment of Cost Auditor Companies requiring cost audit 30 days from BM or 180 days from 01.04.2025, whichever is earlier
ADT-1 Appointment of Auditor Every company 14.10.2025 (15 days post AGM) 11.10.2025 (OPC)
AOC-4 / XBRL / CFS Filing of annual financial statements Specified companies 29.10.2025 (30 days from AGM) 27.09.2025 (OPC)
MGT-14 Filing resolutions on board report and accounts adoption Limited companies 30 days from board meeting
Demat for Pvt Cos Mandatory demat compliance under amended rules Private companies (excluding small/govt. companies) 30.06.2025
Form-8 (LLP) LLP’s Statement of Account & Solvency Every LLP 30.10.2025
MGT-7 / MGT-7A Annual return with company details MGT-7: All companies MGT-7A: Small Co. / OPC 28.11.2025
CRA-4 Filing of Cost Audit Report Companies under cost audit 30 days from receipt of cost audit report
CSR-2 Reporting on Corporate Social Responsibility contribution Companies required to comply with CSR provisions Due date generally aligns with AOC-4 filing

Law Governing the Conversion of Proprietorship into a Private Limited Company

The conversion is governed under:

  • Companies Act, 2013 – Covers the registration and compliance of private limited companies.
    Income Tax Act, 1961 – Specifically Section 47(xiv), which allows tax-neutral transfer of assets from proprietorship to company, subject to conditions.

Key Legal Points:

  • All assets and liabilities must be transferred to the company.
  • The sole proprietor must hold at least 50% of the company’s shares for 5 years.
  • The business must continue for a minimum of 5 years post-conversion.
  • No benefit should accrue to the proprietor other than share allotment.

Benefits of Conversion from Proprietorship to Private Limited Company

Converting to a private limited company offers multiple strategic advantages:

  • Limited Liability: Personal assets of owners are protected from business debts.
  • Increased Credibility: Appears more professional to clients, vendors, and investors.
  • Access to Funding: Equity funding becomes possible through share issuance.
  • Separate Legal Identity: Contracts and property can be in the company’s name.
  • Tax Benefits: Eligible for lower corporate tax rates and more deductions.
  • Ownership Transfer: Shares can be transferred, making exit or succession easier.
  • Improved Governance: Structured decision-making via the Board of Directors.

Requirements for Conversion

Here are the key requirements to convert a proprietorship into a private limited company:

  • Legal Agreement: A takeover agreement must be executed to transfer the business.
  • Memorandum of Association (MoA): Must include a clause to take over the existing business.
  • Minimum Capital: While there is no fixed capital requirement, at least ₹1 lakh is commonly shown.
  • Shareholding: The proprietor should hold at least 50% shares and voting rights post-conversion.
  • Minimum Directors: At least 2 directors (including the proprietor).
  • Asset Transfer: All tangible and intangible business assets must be transferred.

Related Read: Difference between MOA and AOA

Prerequisites for Forming a Private Limited Company

Before converting, the following conditions must be fulfilled to form a Private Limited Company:

  • Minimum 2 Directors: At least one must be a resident of India.
  • Minimum 2 Shareholders: Can be the same as directors.
  • DIN (Director Identification Number) for all directors.
  • DSC (Digital Signature Certificate) for signing incorporation documents.
  • Unique Name Approval through MCA's RUN or SPICe+ process.
  • Registered Office Address: Proof of ownership or rent agreement with utility bill.

Conditions for Converting to a Sole Proprietorship

To legally convert a sole proprietorship into a private limited company, the following conditions must be satisfied:

  1. Asset Transfer: All business assets must be transferred to the company without any monetary consideration except shares.
  2. Shareholding Requirement: The Proprietor must own ≥50% of the total share capital.
  3. No Other Benefits: No additional consideration, like cash or debt relief, is allowed.
  4. Continuity of Business: The business must continue post-conversion for at least 5 years.
  5. Valuation of Assets: Must be done by a Chartered Accountant to determine fair value.
  6. Documentation: Legal agreement (slump sale or asset transfer) must be executed.

Related Read: Difference Between Sole Proprietorship and One Person Company

Documents Required for Conversion to Private Limited Company

Here’s a checklist of documents you’ll need:

For Proprietor (Now Director/Shareholder):

For Business:

  • Ownership/Rental proof of business premises
  • Utility bill (not older than 2 months)
  • NOC from the landlord if rented
  • Statement of assets and liabilities (certified by a CA)

Procedure for Conversion of Proprietorship to Company

Follow these steps to convert your sole proprietorship into a private limited company:

Step 1: Name Reservation

Apply for the company name through RUN or SPICe+ Part A on the MCA portal.

Step 2: Get DSC

Obtain a Digital Signature Certificate (DSC) for all proposed directors.

Step 3: Draft MOA & AOA

  • Include a clause in the Memorandum of Association (MoA) to take over the existing business.
  • Prepare Articles of Association (AOA) for internal governance.

Step 4: File Incorporation via SPICe+

Submit SPICe+ forms (Part A and B) along with:

  • PAN & TAN application
  • MOA, AOA, declarations, affidavits, and other attachments.

Step 5: Execute Takeover Agreement

After the company's incorporation, a business takeover agreement must be signed between the proprietor and the company.

Step 6: Asset Transfer

Transfer all business assets and liabilities to the newly formed company.

Step 7: Post-Incorporation Tasks

  • Open a company bank account
  • Apply for GST, Shops & Establishment licenses (if required)
  • File commencement of business (INC-20A) within 180 days

Frequently Asked Questions (FAQs)

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

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

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

Register your business
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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

Can a proprietorship be converted to a Private Limited Company?

Yes, a proprietorship can be converted into a Private Limited Company under the Companies Act, 2013. This is typically done through a business transfer agreement (like a slump sale), followed by incorporation of a new company that takes over the assets and liabilities of the proprietorship.

Which is better: Proprietorship or Private Limited Company?

It depends on your business goals:

Form Purpose Applicable To Due Date
MSME-1 Reporting outstanding payments to MSMEs > 45 days All specified companies 30.04.2025 (Oct–Mar) 31.10.2025 (Apr–Sep)
NDH-3 Half-yearly return filing for Nidhi companies Nidhi companies 30.04.2025 (Oct–Mar) 30.10.2025 (Apr–Sep)
Form-11 (LLP) Annual return of LLP with business and partner details All registered LLPs 30.05.2025
FC-4 Annual return of foreign company Foreign companies 30.05.2025
NDH-1 Return of statutory compliances Nidhi companies (as applicable) 29.06.2025
DPT-3 Reporting deposits and loans Every company 30.06.2025
PAS-6 Share Capital Audit Report Reconciliation Unlisted public companies 30.05.2025 (Mar) 29.11.2025 (Sep)
FLA Annual return to RBI for FDI/ODI holders Companies with FDI/ODI 15.07.2025
DIR-3 KYC KYC of Directors/DPs All DIN/DPIN holders as on 31.03.2025 30.09.2025
FC-3 Filing annual accounts of foreign company Foreign companies’ branches, liaison, and project offices 31.12.2025
CRA-2 Appointment of Cost Auditor Companies requiring cost audit 30 days from BM or 180 days from 01.04.2025, whichever is earlier
ADT-1 Appointment of Auditor Every company 14.10.2025 (15 days post AGM) 11.10.2025 (OPC)
AOC-4 / XBRL / CFS Filing of annual financial statements Specified companies 29.10.2025 (30 days from AGM) 27.09.2025 (OPC)
MGT-14 Filing resolutions on board report and accounts adoption Limited companies 30 days from board meeting
Demat for Pvt Cos Mandatory demat compliance under amended rules Private companies (excluding small/govt. companies) 30.06.2025
Form-8 (LLP) LLP’s Statement of Account & Solvency Every LLP 30.10.2025
MGT-7 / MGT-7A Annual return with company details MGT-7: All companies MGT-7A: Small Co. / OPC 28.11.2025
CRA-4 Filing of Cost Audit Report Companies under cost audit 30 days from receipt of cost audit report
CSR-2 Reporting on Corporate Social Responsibility contribution Companies required to comply with CSR provisions Due date generally aligns with AOC-4 filing

- Choose proprietorship if you're running a small, low-risk business (e.g., freelancing, small shop).

- Choose a Private Limited Company if you want to scale, raise funds, or limit personal risk.

What is the tax rate for a Private Limited Company?

As of FY 2024–25 (subject to updates in the Union Budget), Iincome tax rate for Private Limited Companies (Turnover < ₹400 crore): 25% (excluding cess & surcharge).

Any other domestic company is taxed at 30%.

What is the biggest disadvantage of a sole proprietorship?

The biggest disadvantage is unlimited personal liability.
If the business incurs debt or faces a lawsuit, the proprietor’s personal assets (like home, savings, car) can be used to pay off liabilities.

Other major drawbacks:

  • Difficult to raise external funding
  • Lack of business continuity (ends with the owner’s death)
  • Limited scalability and professional image

Related Posts

Director in a Private Limited Company: Meaning, Roles, and Types

Director in a Private Limited Company: Meaning, Roles, and Types

A director in a private limited company plays a crucial role in steering the business towards success while ensuring it operates within legal and ethical boundaries. They’re not just figureheads—they are the driving force behind the company’s growth and stability. In India, the role of private limited company directors is both powerful and essential. 

Beyond just compliance, directors also inspire and lead the team. They set the tone for the company's culture and vision, fostering an environment where employees feel motivated and valued. Their decisions can drive innovation, enhance productivity and ultimately lead to the company's success.

Table of Contents

Meaning of Director in Private Limited Company

In a private limited company, a director is an individual appointed to the board of directors, responsible for managing the company's affairs. Directors act on behalf of the company, making high-level decisions to steer the company toward its goals.  For example, appointing key executives, such as a CEO or CFO or approving budgets to support growth initiatives.

Be it any type of company, their role includes overseeing corporate strategies, managing financial risks and ensuring compliance with relevant laws. 

Directors are entrusted with fiduciary duties and expected to act in the company's best interest, as well as that of shareholders and stakeholders. They are key decision-makers and hold significant power in shaping the company's direction, whether in operations, business expansions or financial management.

In short, directors form the backbone of a company’s governance structure and are accountable for its overall performance.

Becoming Director in a Private Limited Company

To become a director in a private limited company, follow these steps:

Step 1. Obtain a Director Identification Number (DIN):

  • Apply for a unique DIN via the Ministry of Corporate Affairs (MCA) portal.
  • This is a mandatory requirement for anyone seeking an appointment as a director.

Step 2. Prepare Necessary Documents:

  • Gather proof of identity (such as a PAN card) and address (such as an Aadhaar card or utility bill).
  • Ensure all documents are valid and up-to-date for smooth processing.

Step 3. Submit Documents During Incorporation:

  • Provide the required documents as part of the company incorporation or appointment process.

Step 4. Appointment by Shareholders:

  • The company's shareholders formally appoint the director during a board meeting.
  • Ensure the appointment is in compliance with the company's Articles of Association.

Step 5. Register Appointment with Registrar of Companies (RoC):

  • The appointment must be officially registered with the RoC to complete the process.

Step 6. Understand Director Responsibilities:

  • Recognise that being a director comes with significant legal, financial, and operational responsibilities.

Private Limited Company Directors Responsibilities

A director in pvt ltd company fulfils various duties and responsibilities that ensure the company’s smooth operation and compliance with laws. Here are some company director duties:

  • Act within Powers

Directors must act within the authority of the company's Memorandum and Articles of Association, ensuring all actions are legal and authorised.

Example: A director of a manufacturing firm must seek board approval before signing a contract for a new supplier, as stipulated in the company’s Articles of Association.

  • To Promote the Welfare of the Company

Directors must always prioritise the company’s success, avoiding decisions that might harm its operations or financial standing.

Example: A director of a retail chain may opt to delay expansion plans during an economic downturn to ensure the company’s financial stability.

  • Exercise Personal Discretion

Directors are expected to use their judgment and discretion in decision-making, ensuring they make independent choices that align with the company’s interests.

Example: A director in a tech startup may choose to invest in a high-potential but risky innovation project after independently analysing market trends, even if other board members are hesitant.

  • Avoid Conflict of Interest

Directors must avoid situations where their personal interests conflict with the interests of the company, such as taking part in business transactions that may benefit them personally.

Example: A director owning shares in a vendor company must disclose this relationship and recuse themselves from decisions involving contracts with that vendor.

  • Make Independent Decisions

As a director, it’s crucial to maintain the ability to make independent decisions that are in the best interest of the company’s growth and long-term success. 

Example: A director may support a merger proposal after conducting an unbiased evaluation of the deal’s benefits, even if opposed by some stakeholders.

  • Crisis Management

During challenging times, directors must manage crises effectively, keeping the company’s long-term goals in mind and navigating risks judiciously.

Example: A director in a logistics company might quickly implement contingency plans during a supply chain disruption, ensuring customer commitments are met while minimizing losses.

The role of a director in a company is a balance of leadership, responsibility and ethics. Every decision you make impacts the company, and you must ensure that the company thrives and adheres to the law.

Types of Directors in Company Law

Private limited companies can have different types of company directors, each with specific roles and responsibilities. Major types of directors in a private limited company include:

  • Managing Director(MD)

The Managing Director (MD) is the highest ranking director responsible for overseeing the company’s daily operations and ensuring its goals and strategies are successfully carried out.

As the MD, this director holds significant decision-making authority and is responsible for setting organisational policies, managing resources and leading the team. They work closely with the board to align the company’s strategic initiatives with long-term objectives. 

The MD bridges the board and the company's operational team, driving performance and growth.

  • Whole-Time Director

A Whole-Time Director is a full-time employee dedicated to specific operational responsibilities within the organisation. Unlike non-executive directors, they are involved in the company's daily operations, overseeing areas such as finance, HR or marketing. 

Their role is to ensure smooth operational performance and to support the MD and board by managing specific functions and executing company policies. Whole-Time Directors are vital in implementing the board’s strategic decisions on a day-to-day basis.

  • Ordinary Director

An Ordinary Director is a member of a company’s board of directors, serving in a non-executive capacity. Their primary role is to attend board meetings, contribute to discussions, and participate in decision-making processes that shape the company's strategy and policies. 

Unlike executive directors or managing directors, Ordinary Directors are not involved in the day-to-day management or operations of the business.

  • Nominee Director

A Nominee Director is appointed to represent the interests of a particular stakeholder, often an investor or a lending institution. They serve on the board to ensure that the appointing party’s interests and concerns are considered in key company decisions. 

Nominee Directors may be particularly common in joint ventures or companies with external funding. Their responsibility is to maintain a balanced perspective in the boardroom, ensuring the investor or stakeholder’s views are addressed without compromising the company's broader interests.

  • Alternate Director

An Alternate Director is appointed temporarily to act in place of an absent director, usually one who is based abroad or unavailable for a period. The Alternate Director has the same powers and responsibilities as the original director and participates in board meetings and decision-making. 

This role ensures continuity in governance, allowing the company to maintain full functionality even when a permanent director is unavailable.

  • Professional Director

A Professional Director is an individual appointed to a company’s board based on their expertise, skills, and experience rather than their relationship with the company’s founders or shareholders. 

Typically, these directors bring specialised knowledge in areas such as finance, law, operations, marketing, or industry-specific expertise that adds value to the board’s decision-making process.

All the types of directors in a company bring specific expertise and focus, helping ensure a well-rounded leadership team.

Number of Directors in Private Limited Company

The number of directors in private limited company depends on the scale and needs of the business. The minimum directors in the private limited company can be 2. However, the maximum number of directors in a private company is 15. A smaller company may only need two or three directors.

It is important to balance the number of directors, as having too few can limit the diversity of opinions and skills, while too many can create inefficiencies in decision-making. 

When determining the optimal number of directors for a company, consider the following factors:

  • Company Size and Complexity

Larger or more complex companies benefit from more directors handling diverse functions and providing specialised knowledge in finance, operations and marketing.

  • Industry Requirements

Certain industries, especially those highly regulated (e.g., finance, healthcare), may require directors with specific expertise or certifications, potentially increasing the ideal board size.

  • Diversity of Skills and Perspectives

A well-rounded board should include directors with diverse skills, professional backgrounds and viewpoints, enhancing decision-making and innovation.

  • Corporate Governance Standards

For better governance and accountability, adding more independent or non-executive directors can help provide objective oversight and mitigate conflicts of interest.

  • Decision-Making Efficiency

Smaller boards may lead to quicker decision-making, while larger boards can become cumbersome; balance is key for smooth and effective operations.

  • Legal and Compliance Requirements 

Local law often sets minimum and maximum limits on the number of directors, so companies must adhere to these regulatory standards.

  • Cost Implications

Increasing the number of directors adds to costs (e.g., compensation, meeting expenses), so financial resources must be considered when expanding the board.

  • Growth Stage

Early-stage companies may need fewer directors, focusing on core founders, while scaling companies benefit from additional directors with strategic and operational experience.

So, the ideal number of directors depends on the company’s size, the industry and the areas of expertise required.

Company Director Residency Requirement

In India, one of the key legal director requirements for establishing a private limited company is that at least one director must be a resident of India. Under the Companies Act, a resident director is defined as someone who has spent at least 182 days in India during the preceding calendar year. 

This company director residency requirement serves multiple purposes:

  • To ensure local governance and effective leadership
  • As a safeguard against companies that may be established with little or no physical presence in the country, helping the government ensure that companies are genuinely rooted in the local economy. 
  • To enhance accountability and align the company’s operations with India’s regulatory framework, benefiting both the company and its stakeholders.

Conclusion

Directors in private limited companies play a critical role in steering the organisation toward growth and ensuring legal compliance. With increasing complexities in business operations, the responsibilities of directors are more significant than ever. 

As businesses grow and face new challenges, the role of directors will evolve, but one thing will remain constant: the need for both responsible and visionary leadership. Directors must continue to adapt, making informed decisions to lead their companies into the future.

FAQs on Directors in a Private Limited Company

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

Register your business
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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
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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

Can a person be a director in more than one company?

In India, under the Companies Act of 2013, a person can serve as a director in a maximum of 20 companies at once. However, there are limits within this cap—only 10 of these can be public companies. This rule aims to ensure that directors can effectively fulfil their responsibilities without being stretched too thin across multiple organisations.

Can a director be appointed without a DIN (Director Identification Number)?

No, a director in India cannot be appointed without a DIN. A DIN is mandatory under the Companies Act of 2013, as it uniquely identifies each director and is required for their appointment in any company. The DIN application is submitted to the Ministry of Corporate Affairs, and once obtained, it is used for all directorships and filings.

How does a director influence a company's culture?

A director plays a significant role in shaping a company’s culture by setting ethical standards, defining organisational values and leading by example. Directors influence company culture through the policies they approve, the leadership tone they set and their interactions with executives and employees. 

By encouraging open communication, promoting transparency and supporting employee development, directors can positively impact morale and align the company’s culture with its strategic goals.

Are company directors involved in day-to-day operations?

Generally, directors are not involved in a company's day-to-day operations; their role is more strategic and supervisory. They focus on high-level governance, setting long-term goals and ensuring that the company's management team is performing well. 

However, in smaller companies or startups, directors might take a more hands-on approach, becoming more involved in daily tasks and decisions due to limited resources or a smaller team.

Do You Need a CA to Register a Company in India?

Do You Need a CA to Register a Company in India?

Starting a company in India is an exciting journey, but it comes with a maze of legal and financial formalities. One common question entrepreneurs often ask is: Do I need a Chartered Accountant (CA) to register my company? The short answer is- not necessarily. However, understanding when and why to involve a CA can save you time, money, and compliance headaches down the road.

Let’s break down the role of a CA in company registration and explore whether you need one for your business setup.

Table of Contents

Is CA Required for Company Registration?

Technically, a chartered accountant is not mandatory to register a company in India. The Ministry of Corporate Affairs (MCA) provides an online portal that allows founders to complete the registration process on their own.

However, company registration involves more than just filing forms- it requires compliance with various legal and financial requirements. While you can handle these steps yourself, professional guidance from a CA can ensure accuracy and avoid costly mistakes.

Who is a CA (Chartered Accountant)?

A Chartered Accountant (CA) is a certified finance expert trained in areas such as accounting, taxation, auditing, and corporate laws. They help businesses navigate complex financial landscapes and comply with statutory norms.

Beyond technical know-how, CAs translate rules into business action. They design accounting systems and controls, prepare accurate financial statements, interpret tax laws (income tax, GST, transfer pricing and international tax issues), and conduct statutory and internal audits to reduce risk. They also support compliance tasks such as preparing ROC filings, tax returns, GST returns, and maintaining books in line with applicable standards.

For startups and MSMEs, they often act as a de facto finance team, building financial models for fundraising, advising on the optimal business structure, preparing due diligence packs for investors, or structuring transactions to be tax-efficient and legally sound.

Why Hire a CA While Setting Up a Company?

Hiring a CA during your company’s setup offers end-to-end support, including:

  • Selecting the right company type (Private Ltd, LLP, Sole Proprietorship, etc.) based on your goals and tax implications

  • Handling registrations like PAN, TAN, GST, and Certificate of Incorporation (COI)

  • Drafting key documents such as the Memorandum of Association (MOA) and Articles of Association (AOA)

  • Ensuring tax compliance right from the start

  • Setting up your accounting system tailored to your business

  • Preparing financial statements and projections that appeal to investors and lenders

In short, a CA simplifies the entire process and helps lay a solid foundation for your business growth.

The Legal Requirements for Company Registration

Under the Companies Act, 2013, company registration involves the following key legal steps:

  • Selecting your business structure

  • Obtaining a Digital Signature Certificate (DSC) for directors

  • Filing the SPICe+ (Simplified Proforma for Incorporating Company electronically Plus) form with the MCA

  • Preparing and submitting the Memorandum of Association (MOA) and Articles of Association (AOA)

  • Applying for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for tax purposes

While none of these steps legally require a CA, professional guidance can help avoid errors, delays, or non-compliance issues that could cost you in penalties or missed opportunities.

Benefits of Hiring a CA for Company Registration

  • Expert handling of complex regulatory and tax matters
  • Reduced chances of filing errors and rejections
  • Better financial and tax planning from day one
  • Time savings and peace of mind

That said, if you decide not to hire a CA, you can always use online platforms that provide comprehensive company registration services, guiding you through each step seamlessly and at competitive prices.

When is a CA Essential for Company Registration?

While not mandatory, involving a CA becomes essential in specific situations such as:

  • Registering complex entities like Limited Liability Partnerships (LLPs) registration, sole proprietorship registration companies with foreign directors
  • Preparing detailed financial projections and business plans for funding
  • Ensuring strict tax and GST compliance, especially if your business deals with multiple states or international transactions
  • Handling annual compliances post-registration, including audits and tax filings

In such cases, a CA’s expertise is crucial to keep your business compliant and financially sound.

Can You Register a Company Without a CA?

Absolutely! Company registration is possible without a CA, especially through the MCA’s online portal designed for entrepreneurs to file their incorporation documents directly. The process has been simplified over the years, making it more accessible than ever.

However, registering without professional help means you need to be very thorough with legal and financial nuances. Using an online platform that manages the end-to-end registration process can be a smart alternative- these platforms often offer packages that include form filing, document drafting, and government liaison, all without the higher fees of a traditional CA.

Frequently Asked Questions (FAQs)

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

Do freelancers need to register a company in India?

No, freelancers in India do not need to register a company to work legally. You can operate as an individual under your own name using your PAN card and file your income tax returns as a self-employed professional.

What does a CA do for a company?

A Chartered Accountant (CA) provides end-to-end financial and compliance services for a company, including:

  • Choosing the right business structure during setup
  • Company incorporation and registrations (PAN, TAN, GST, etc.)
  • Bookkeeping and accounting as per legal standards
  • Tax planning and filing (Income Tax, GST)
  • Statutory audits and financial reporting
  • Advising on cost control, cash flow, and budgets
  • Assisting in fundraising by preparing investor-ready financials
  • Ensuring compliance with corporate laws under the Companies Act, 2013

In short, a CA ensures that your business remains financially healthy, compliant, and investor-ready.

Which CA is highly paid?

The highest-paid Chartered Accountants in India are usually those who:

  • Work in big consulting firms (like the Big 4- Deloitte, PwC, EY, KPMG) in senior positions
  • Serve as Chief Financial Officers (CFOs) or Finance Heads in large corporations
  • Specialise in niche, high-demand areas such as:
    • International taxation
    • Mergers & acquisitions (M&A) advisory
    • Forensic auditing
    • Risk and compliance management for large banks and multinationals

Build a strong independent practice serving high-net-worth individuals, big corporations, or startups in funding and IPO stages

Mukesh Goyal

Mukesh Goyal is a startup enthusiast and problem-solver, currently leading the Rize Company Registration Charter at Razorpay, where he’s helping simplify the way early-stage founders start and scale their businesses. With a deep understanding of the regulatory and operational hurdles that startups face, Mukesh is at the forefront of building founder-first experiences within India’s growing startup ecosystem.

An alumnus of FMS Delhi, Mukesh cracked CAT 2016 with a perfect 100 percentile- a milestone that opened new doors and laid the foundation for a career rooted in impact, scale, and community.

Read more
Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

The SIP-EIT program offers financial assistance to MSMEs and technology startups in filing international patents. It also encourages innovation, recognizes the value and capabilities of global IP, and captures growth opportunities in the ICTE sector.’

Description Who is it for? Benefits
To foster innovation by providing financial support to MSMEs and Technology Startup units for international patent filing For MSMEs and Technology startups A maximum reimbursement of Rs. 15 Lakhs per invention or 50% of the total charges incurred in filing and processing a patent application, whichever is lesser

The primary objective of the scheme is to safeguard knowledge and innovative products from misuse. Since its inception, the scheme has revealed numerous new capabilities and received government backing. The SIP-EIT scheme aims to facilitate approximately 200 international ICT patent applications.

Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

Table of Contents

Eligibility

  • Must be registered under the Government of India's MSME Development Act of 2006.
  • Must be a company registered under the Companies Act of the Government of India and must meet the investment restrictions in plant and machinery or equipment set forth in the Government of India's MSME Development Act 2006.
  • Must be a technology incubation enterprise or a startup registered as a company and located in an incubation center or park (in this case, a certification from the incubation center or park is required).
  • Must be an STP Unit that has been approved.
  • The invention must be in the field of electronics or information and communication technologies.

List Of Important Documents Required

  1. Scanned copy of MSME Registration Certificate (For MSME Units)
  2. Scanned copy of Company Registration Certificate (For Companies)
  3. Scanned copy of STP Registration (For STP Units)
  4. Scanned copy of the Registration Certificate issued by a competent authority and a certification from the incubation Centre/Park (For Technology Incubation Enterprise/Startup)
  5. Scanned copy of the last audited Balance Sheet
  6. Copy of product brochure, if any
  7. Copy of latest Annual Report, if any
  8. Copy of official filing receipt (OFR) with the Indian Patent Office
  9. Copy of waiver under section 39 of the Indian Patent Act (Outside India)
  10. Copy of proof of the application under PCT/ Paris Convention or Direct International Filing
  11. Copy of technical writeup of invention as per the format of technical writeup
  12. Patent search report
  13. Scanned copy of Details for transfer of e-payments as per the format
  14. Scanned copy of the Declaration form duly signed and sealed as per the format
  15. A statement by the auditor of the enterprise that they fulfill the criteria of investment in plant and machinery or investment in capital equipment (as the case may be) as stipulated in the MSMED Act 2006.

Application procedure for Startups

  • Visit the official website http://www.ict-ipr.in/sipeit/login.
  • Create a User account by logging in after filling out all the details.
  • Once “Login” is created, one can apply online for the scheme by submitting the required documents.

Selection OR Acceptance of Startups

The acceptance of startups under this scheme depends on the following criteria:

  • For a particular invention, there can be one application for foreign filling.
  • An Indian patent attorney firm with at least five years of experience in handling international patent applications handles and processes patent applications.
  • Only five applications per financial year will be considered for reimbursement from a single applicant.
  • The applicant should have already filed a patent application with the complete specification for the said invention with the Indian Patent Office.
  • International patent filing options include the PCT route, the Paris Convention route, or filing directly in a foreign country of the innovator's choice.

Benefits

  • This scheme provides financial support for the International filing of patents at different stages, including expenses in filing and processing.
  • The maximum amount reimbursed per innovation shall be Rs 15 lakhs or 50% of the total expenditures paid in filing and processing a patent application up to grant, whichever is less.
  • Under the scheme, financial support is also provided to Education Institutes, Meity societies, etc., for organizing seminars & workshops on IPR awareness.

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

What types of intellectual property are covered under the SIP-EIT scheme?

The scheme primarily focuses on supporting international patent applications related to innovations in the Electronics & Information Technology sector. This may include inventions, designs, processes, and other forms of intellectual property.

Can individuals or organizations from outside India apply for support under the SIP-EIT scheme?

No, the SIP-EIT scheme is specifically designed to support Indian innovators, startups, MSMEs, and other entities engaged in research and development activities within India.

Rize.Start

Hassle free company registration through Razorpay Rize

in just 1,499 + Govt. Fee
With ₹0 hidden charges

Make your business ready to scale. Become an incorporated company through Razorpay Rize.

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Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
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
Dhaval Trivedi
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.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/
Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
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
Dhaval Trivedi
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.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/