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 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

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

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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Related Posts

Requirements to Obtain the Shop and Establishment Act Registration

Requirements to Obtain the Shop and Establishment Act Registration

The Shop and Establishment Act is a vital piece of legislation that governs the working conditions and employment terms in shops, commercial establishments, and other non-manufacturing businesses across India. As an entrepreneur or business owner, it's essential to understand the registration process and ensure compliance with the provisions of this Act, which are enforced by the respective State Labour Departments.

Obtaining the Shop and Establishment License is a mandatory requirement for most businesses operating in India. Whether you're setting up a retail store, restaurant, office, theatre, or even an online business, you'll need to register under the Shop and Establishment Act to legally operate in your state.

Table of Contents

The Shop and Establishment Act

The Shop and Establishment Act is a state-specific legislation aimed at regulating and standardising the working conditions in shops, commercial establishments, hotels, restaurants, and other service-oriented businesses. The primary objective of this Act is to ensure fair and humane treatment of workers by stipulating guidelines for:

  • Work hours and overtime
  • Minimum wages
  • Leave and holiday policies
  • Employee welfare and benefits

Since each state has its own version of the Act, the specific rules and regulations may vary depending on where your business is located. However, the core principles of employee protection and standardised work conditions remain consistent across all states.

Registration Under The Shop and Establishment Act

For most businesses in India, registration under the Shop and Establishment Act is mandatory. Any shop, commercial establishment, or service-based enterprise—whether physical, online, or home-based—must obtain this license within 30 days of starting operations, as per state-specific regulations.

The registration process involves submitting an application to the Chief Inspector or Labour Commissioner of your area, along with the required documents and fees. Upon verification and approval, you'll receive a Shop and Establishment License, which serves as proof of your legal compliance and is essential for:

  • Opening business bank accounts
  • Applying for loans and financial assistance
  • Availing government schemes and benefits

Failing to obtain the necessary registration can result in penalties, fines, and legal consequences, so it's crucial to prioritise this process as you set up your business.

Setting up your business? Get expert help with Shop and Establishment Registration and Company Registration today.

Regulations Under The Shop and Establishment Act

To ensure fair and safe working conditions for employees, the Shop and Establishment Act lays down several regulations that employers must adhere to. Some of the key areas covered under the Act include:

  1. Work Hours and Overtime:
    • Standard work hours for adults are typically limited to 8-9 hours per day and 48 hours per week.
    • Overtime wages, usually double the regular rate, must be paid for work beyond the standard hours.
    • Employees are entitled to a weekly off of at least 24 consecutive hours.
  2. Wages:
    • Employers must pay wages on time, typically by the 7th or 10th of the following month, depending on employee count.
    • Men and women must receive equal remuneration for the same work, as per the Equal Remuneration Act, 1976.
  3. Leave and Holidays:
    • Workers are entitled to various types of leave, such as earned leave, casual leave, and sick leave.
    • The number of leave days and paid holidays varies by state.
  4. Employee Welfare:
    • Employers must provide basic amenities such as drinking water, clean toilets, first-aid kits, and a crèche (if employing more than 50 women).
    • The workplace should be well-ventilated, adequately lit, and maintained at a comfortable temperature.
  5. Record-Keeping:
    • Businesses must maintain proper records of work hours, leave, overtime, wages, and other employee-related data.
    • Wage slips must be provided to employees every month, detailing their earnings and deductions.
  6. Display of Notices and Registers:
    • The Shop and Establishment Registration certificate and an abstract of the Act must be prominently displayed in the local language.
    • Employers must maintain registers such as appointment letters, service books, leave records, and wage registers.

By adhering to these regulations, businesses can create a safe, fair, and compliant work environment for their employees.

Eligible Businesses under the Shops and Establishments Act

The Shops and Establishments Act applies to a wide range of businesses, including but not limited to:

  • Shops and retail establishments
  • Commercial offices (e.g. legal, accounting, consulting)
  • Service providers (e.g. IT firms, salons, courier services)
  • Hotels, restaurants, and eateries
  • Educational institutions and training centres (e.g. coaching centres, training institutes)
  • Healthcare facilities and clinics (e.g. clinics, diagnostic centres)
  • Entertainment and recreational centres (e.g. theatres, gyms, amusement parks)

However, the specific applicability may vary from state to state. For example, some states require registration for establishments with a minimum of 10 employees, while others have a lower threshold. Manufacturing units and factories are generally not covered under this Act, as they are governed by the Factories Act.

To ensure compliance, it's essential to verify your business's eligibility with your local state authority and adhere to the specific requirements laid down by your state's Shop and Establishment Act.

Requirements to obtain the Shop and Establishment Act Registration

To obtain the Shop and Establishment Act Registration, you'll need to apply along with the following documents and details:

  1. Business Information:
    • Name and address of the establishment
    • Nature of business activity
    • Number of employees
    • Working hours and shifts
  2. Proof of Identity and Address:
    • Owner's identity proof (Aadhaar card, PAN card, etc.)
    • Proof of business address (rental agreement, property deed, etc.)
  3. Other Documents:
    • Partnership deed or incorporation certificate (for partnership firms and companies)
    • Layout plan of the establishment
    • List of employees with their details
    • Consent letter from the property owner (if operating from rented premises)
  4. Registration Form:
    • Duly filled and signed application form, which can be obtained from the local labour department or downloaded from their website.
  5. Fees:
    • Registration fees vary by state and are typically based on the number of employees and the nature of the business.

Some states may have additional requirements, so it's essential to check with your local labour department for the exact list of documents and procedures specific to your state.

Process For Obtaining Shop and Establishment Registration

The process for obtaining the Shop and Establishment Registration may vary slightly from state to state, but the general steps involved are as follows:

  1. Visit the website of your state's labour department or the online portal for Shop and Establishment Act Registration.
  2. Fill out the online application form with the required details, such as:
    • Employer name and contact information
    • Establishment name and address
    • Nature of business
    • Number of employees
    • Working hours and shifts
  3. Upload the necessary documents, as mentioned in the previous section, in the prescribed format (usually PDF or JPEG).
  4. Pay the registration fees online using a credit card, debit card, or net banking.
  5. Submit the application and wait for the labour department to verify your documents and details.
  6. Upon successful verification, you will receive the Shop and Establishment Registration certificate, either electronically or by post.

Alternatively, you can also opt for the offline process by visiting the local labour department office, submitting the physical application form, and paying the fees in person. However, the online process is generally faster and more convenient.

Once you obtain the registration certificate, make sure to display it prominently at your establishment and renew it before the expiry date to maintain compliance with the Act.

Validity of Shop And Establishment Registration

The validity of the shop and establishment license varies from state to state. Some states provide a lifetime registration, while others require periodic renewal. The renewal period can range from 1 to 5 years, depending on the state. Some states, like Maharashtra and Delhi, offer long-term or lifetime validity—up to 10 years or even 21 years—while others such as Karnataka, Tamil Nadu, and Uttar Pradesh require periodic renewal every 3 to 5 years. The registration fees also differ and are typically calculated based on the number of employees, the nature of the business, and the duration of registration selected.

It's crucial to keep track of your registration's validity and initiate the renewal process well before the expiry date to avoid any lapses in compliance. Renewal fees and procedures may also differ by state, so make sure to check with your local labour department for the most up-to-date information.

Conclusion

Registering under the Shop and Establishment Act is a vital step for any business operating in India’s commercial sector. It not only ensures legal compliance but also promotes transparent and fair employment practices. By understanding your state’s specific rules, maintaining accurate records, and renewing your registration on time, you can protect your business and your employees.

Compliance isn't just a legal formality—it's a foundation for sustainable growth and a responsible workplace.

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 documents are required for shop and establishment registration in UP?

  1. To register your shop or establishment in Uttar Pradesh, you'll need to submit the following documents:
    • Duly filled application form
      (Available online through the UP Labour Department portal)
    • Proof of business address
    • Identity proof of the owner(s)
    • List of employees
    • Layout plan of the establishment
    • Partnership deed or incorporation certificate (if applicable)
    • Consent letter from the property owner (if operating from a rented premises)

What are the documents required for shop and establishment registration in Maharashtra?

  1. In Maharashtra, you'll need to submit the following documents for Shop and Establishment Registration:
    • Completed application form
    • Proof of business address
    • Identity proof of the owner(s)
    • Partnership deed or incorporation certificate (if applicable)
    • List of employees
    • Layout plan of the establishment
    • Fees as prescribed by the state

How do I get permission to open a shop?

  1. To obtain permission to open a shop, you'll need to follow these steps:
    • Register your business under the Shop and Establishment Act by submitting the required documents and fees.
    • Obtain any additional licenses or permits specific to your business.
    • Ensure compliance with local zoning regulations and building codes.
    • Apply for a GST registration if your annual turnover exceeds the prescribed threshold.
    • Open a business bank account and maintain proper financial records.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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How Much Does It Cost to Register a Company in India in 2025?

How Much Does It Cost to Register a Company in India in 2025?

Starting a business in India involves several legal and regulatory steps, one of the most important being company registration under the Companies Act, 2013. While the process itself has been digitised through the Ministry of Corporate Affairs (MCA) portal, the cost of registering a company in India can vary significantly.

It depends on the type of business you choose, your authorised capital, and even which state you’re in. Add in government fees, professional charges, and compliance costs, and the numbers can look very different for a tech startup versus a small consultancy.

This blog breaks down the different types of company registrations, their associated costs, and additional fees you should be aware of while planning your business launch.

Table of Contents

Types of Company Registrations in India

The choice of business structure impacts both compliance requirements and registration fees. Common options include:

Breakdown of Company Registration Fees

The cost of company registration includes government charges, professional fees, and incidental expenses. Below is an approximate breakdown (may vary by state and authorised capital):

  • Private Limited Company: ₹7,000 - ₹25,000

  • Public Limited Company: ₹15,000 - ₹30,000

  • Limited Liability Partnership (LLP): ₹6,000 - ₹12,000

  • One Person Company (OPC): ₹7,000 - ₹20,000

  • Section 8 Company: ₹10,000 - ₹15,000

Disclaimer: These are approximate ranges. The final cost depends on factors like authorized capital, the state of registration, and the service provider you choose.

A Detailed Breakdown of Company Registration Cost

To understand the price ranges above, it's essential to know what you're paying for. The total cost is a sum of three key components:

A. Government & Statutory Fees

These are mandatory fees paid to the Ministry of Corporate Affairs (MCA) and state governments.

  • SPICe+ Form Filing: This is the primary fee for incorporation. It varies based on the company's authorized share capital. For most small companies with capital up to ₹15 Lakhs, there is no filing fee, but other charges still apply.
  • Stamp Duty: This is the most significant variable. It is a state-levied tax on the Memorandum of Association (MoA) and Articles of Association (AoA). Stamp duty in states like Maharashtra or Delhi is different from Tamil Nadu or Karnataka, causing major price variations.
  • PAN and TAN Application: A fee of approximately ₹110 is charged for issuing the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
  • Name Approval (RUN): While you can file the name within the SPICe+ form, a separate name reservation application costs ₹1,000.

B. Professional Fees

This is the fee paid to a Chartered Accountant (CA), Company Secretary (CS), or a law firm for their expertise.

  • What it covers: Drafting legal documents (MoA & AoA), filing the forms correctly, providing consultation, and ensuring the process is smooth and error-free.
  • Why it varies: Fees depend on the complexity of the registration, the professional's experience, and the city of operation. This fee is the primary reason for the wide cost range seen in the market.

C. Ancillary Costs

These are other necessary expenses incurred during the process.

  • Digital Signature Certificate (DSC): Required for all directors/partners to sign the electronic forms. A DSC for two directors typically costs between ₹1,000 - ₹2,000.
  • Registered Office Address: While not a fee, you must have proof of a registered office. If you don't own a property, costs for a rental agreement, NOC, or a virtual office service will apply.
  • Miscellaneous Expenses: Small costs for notarization, printing, and courier services.

Costs of Other Essential Registrations for Company Incorporation

Once your company is registered, you will need other licenses to operate legally. Here are the most common ones and their associated costs.

Registration Government Fee Typical Professional Fee (Approx.)
GST Registration ₹0 (Free) ₹1,500 - ₹3,000
MSME (Udyam) Registration ₹0 (Free) ₹1,000 - ₹2,500
Import Export Code (IEC) ₹500 ₹2,000 - ₹3,000
Trademark Registration ₹4,500 (for Small Enterprises/Individuals) ₹3,000 - ₹7,000
Professional Tax (State-specific) Varies by state (e.g., ₹2,500 annually in Tamil Nadu) ₹1,000 - ₹2,000

Factors Affecting Company Registration Fees

Several factors influence the overall cost of registration:

  1. Type of company: Pvt. Ltd., LLP, OPC, etc.
  2. Authorised share capital: Higher capital means higher government fees.
  3. State of incorporation: Stamp duty varies across states.
  4. Professional help: Costs increase if you hire legal or financial consultants.
  5. Compliance requirements: Annual filings, GST, and audits add to expenses.

Key Costs Involved in Company Registration

When budgeting for company registration in India, consider the following expenses:

  • Office Address Proof- Home, rented, or virtual office setup costs.
  • Digital Signature Certificate (DSC)
  • Director Identification Number (DIN)
  • Name Approval Fee
  • Stamp Duty – State-dependent
  • Registration Filing Fees- Depends on authorised capital.
  • Professional Fees
  • PAN & TAN Application
  • Miscellaneous Costs- Printing, notarisation, shipping, etc.

Tips to Reduce Company Registration Costs

  • Choose the right business structure: Avoid overcomplicating; pick a structure that fits your scale and goals.
  • Hire affordable professionals: Compare fees before finalising consultants.
  • Stay compliant: Timely filings prevent late fees and penalties.

Important update- Additional fees apply for the delay in filing forms

The MCA has tightened rules around compliance. Delayed filing of statutory forms now attracts additional fees, which can be significantly higher than the standard charges.

For example:

  • Delay of up to 30 days: 2x of normal fees
  • Delay of 30- 60 days: 4x of normal fees
  • Delay beyond 180 days: 12x of normal fees

This makes it important for companies to track deadlines, file forms on time, and seek professional assistance when needed to avoid heavy penalties.

Frequently Asked Questions (FAQs)

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

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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

How frequently are the registration fees and compliance costs updated?

The Ministry of Corporate Affairs (MCA) and respective state governments revise registration fees and compliance costs from time to time. Updates usually happen when:

  • There are amendments to the Companies Act, 2013 or the LLP Act.
  • Stamp duty rates change at the state level.
  • MCA introduces new rules for compliance, penalties, or late fees (for example, the recent hike in additional filing fees for delays).

What factors influence the cost of company registration in India?

The total cost of company registration depends on several factors:

  • Type of company
  • Authorised share capital 
  • State of incorporation & stamp duty
  • Number of directors & shareholders
  • Professional services
  • Compliance requirements

Is GST applicable to company registration fees?

  • Government fees (RoC charges, stamp duty, PAN/TAN, DIN, DSC, etc.) – No GST applies.
  • Professional or consultancy fees (CA, CS, or legal professional services) – 18% GST is applicable on the service charges.

So, while statutory fees don’t attract GST, you will pay GST on professional help.

What are the rules for the company registration of a charge?

A “charge” refers to any security interest created on a company’s assets (like a mortgage or hypothecation) to secure a loan. Under the Companies Act, 2013:

  • Every company creating a charge must register it with the RoC within 30 days of its creation using Form CHG-1 (for other than debentures) or Form CHG-9 (for debentures).
  • If not filed within 30 days, registration can still be done up to 300 days with additional fees.

If the charge is not registered, it becomes void against creditors and liquidators, though still valid between the company and lender.

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.

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A guide to Company Registration In USA from India: LLC or C-Corp?

A guide to Company Registration In USA from India: LLC or C-Corp?

In recent years, there has been a discernible shift among Indian entrepreneurs towards incorporating their companies in the United States. The surge in Indian startups seeking investment from U.S. sources has contributed significantly to this inclination to establish a foothold in the American market.

This trend is driven by several factors, including access to a larger pool of venture capital and angel investors in the U.S., as well as the desire to tap into the vast market potential.

The essentials of US Incorporations - documents, eligibility and process.

In today’s blog, we'll explore the essentials of U.S. incorporations, covering essential factors and offering insightful guidance on navigating cross-border requirements.

Table of Contents

Benefits of USA Company Registration

It is highly advisable to go for U.S. incorporation when aiming to raise capital from U.S. investors or penetrate the U.S. market with product sales. Beyond the inherent credibility associated with a U.S. business entity, it instills investor confidence and aligns with U.S. regulatory expectations.

  • It boasts a thriving and a diverse business ecosystem, providing access to a vast market, diverse consumer base, and a network of established businesses and startups.
  • Companies incorporated in the U.S. often find it easier to attract investment, whether through venture capital, private equity, or public markets.
  • It is home to renowned innovation hubs such as Silicon Valley, which fosters creativity, collaboration, and technological advancement. This can be especially beneficial for tech startups and businesses in emerging industries.
  • It offers a relatively straightforward process for business incorporation. Many states, like Delaware, have business-friendly regulations and efficient online platforms that facilitate the setup and management of companies.
  • While the U.S. tax system is complex, businesses may find advantages in various tax incentives and deductions, especially if structured as certain types of corporations.
  • It can serve as a strategic base for international expansion, providing a gateway to both North American and global markets.

Types for Company Registration in USA from India

The United States offers several types of legal structures for businesses, each with its own characteristics and implications. Here are some of the most common types:

•  Single-Person Businesses

•  S Corporations

•  C- Corporations (C-Corp)

•  Limited Liability Companies (LLCs)

•  Non-profit Organizations

Regarding U.S. business structures, two predominant forms of incorporation stand out: Limited Liability Companies (LLCs) and C-Corporations (C-Corps). These structures offer distinct features tailored to diverse business needs and goals.

  • If you want lower compliance and small franchise fees: An LLC may be a suitable choice, especially for small businesses or startups with simpler structures and a desire for reduced administrative burdens.
  • If you want to raise funds: If the goal is to attract external investment, issue stock, or go public in the future, a C Corporation is often more attractive to investors and provides the necessary flexibility for these activities.

Minimum Requirements to register a company in the U.S.

To register a company in the U.S., several essential criteria must be met.

  • Minimum Number of Individuals:
    At least one person is required to register a company in the U.S. This person can act as the sole owner or be part of a group of owners (members or shareholders), depending on the chosen business structure (e.g., LLC, corporation).
  • Registered Agent in Delaware:
    If choosing to register the company in Delaware, having a registered agent in the state is a legal requirement. The registered agent is a person or entity designated to receive legal documents, official correspondence, and other important information on behalf of the company.
  • U.S. Address:
    A U.S. address is required for official correspondence and legal purposes. This address can be either a physical location (such as a brick-and-mortar office) or a virtual address, depending on the nature of the business and the chosen state of registration.

Documents required for U.S. Incorporation

A succinct breakdown of the documents needed for the initial stages of business registration.

  • Name Approval:
    The process for name approval is straightforward. In Delaware, you can perform a real-time search for the desired business name and immediately reserve it if available. This reservation ensures that your chosen business name is secured for your use.
  • Director Details:
    Provide details about the directors or members of the company. This typically includes full names, addresses, contact information, and roles or titles within the company.
  • Number of Shares and Value Per Share:
    Specify the number of authorized shares the company is allowed to issue. Also, determine the par value or the assigned value to each share.

Process for Company Registration in the USA

A roadmap of Company registration in USA

Must-Have Documents After Incorporation

Here’s a list of documents that a business typically receives after the registration process:

1. Certificate of Incorporation

  • This document, issued by the state authorities, officially recognizes the establishment of the corporation. It includes important details such as the company's name, location, and date of incorporation.

2. EIN (Employer Identification Number)

  • The EIN is a unique identifier assigned by the IRS for tax purposes. It typically takes 3 to 4 weeks through standard processing, but an expedited option is available, reducing the timeline to 3 days if you already possess a Social Security Number (SSN).
    This unique identifier, similar to India's PAN (Permanent Account Number), is necessary for various business activities, including opening a bank account, hiring employees, and filing tax returns.

3. Bylaws of the Company (Similar to Articles of Association)

  • Bylaws are internal rules that govern the operation and management of the company. They outline procedures for meetings, decision-making, and other essential aspects of corporate governance.
    In some ways, they are similar to the Articles of Association mandated in India.

4. Banking Resolution

  • A banking resolution is a formal document that authorizes specific individuals within the company to open and manage bank accounts on behalf of the corporation. It provides clarity and legal authority for banking-related activities.

5. Common Stock Certificate

  • Common stock certificates represent ownership in the company. When shares are issued, these certificates are given to shareholders as evidence of their ownership stake in the corporation. They typically include details such as the shareholder's name, the number of shares, and the date of issuance.

Compliances for U.S.- Incorporated Companies

Let's dive into the detailed aspects of compliance for businesses in the US, particularly those with C-Corporation structures and operations in Delaware.

1. Federal Income Tax

  • The Federal Income Tax rate of 21% applies to C-corporations in the United States. They are required to file a tax return annually using the IRS Form 1120. This form outlines the corporation's income, deductions, credits, and taxes owed, etc.

2. Withholding Tax and Related Party Transactions Disclosure

  • Similar to Tax Deducted at Source (TDS), withholding Tax in the U.S. involves deducting a portion of payments made to non-residents for services, dividends, or interest. Additionally, disclosure of related party transactions is a key compliance requirement, ensuring transparency in financial dealings with affiliated entities.

3. Delaware State Franchise Tax

  • Delaware imposes an annual franchise tax on corporations, and the amount varies depending on the type and size of the corporation. The calculation is often based on factors such as authorized shares or assumed par value capital.

4. Delaware State Corporate Income Tax

  • In addition to federal taxes, C-Corporations operating within the state of Delaware are subject to state corporate income tax at a rate of 8.7% on income generated within the state.
    To meet state tax obligations, C-Corporations file the Delaware Form 1100, providing detailed information on income, deductions, and other relevant financial data.

5. Other Regulatory Compliances in Delaware

  • Beyond tax-related obligations, businesses in Delaware must adhere to additional regulatory requirements. This includes filing an annual report with the Delaware Secretary of State.

In a nutshell, be it India or the U.S., there will be a lot of compliances to keep a record of. By diligently meeting these obligations, you can fulfill legal mandates and contribute to a robust and trustworthy business environment.

Incorporation in U.S. vs India

When expanding operations from India to the United States, a common strategy involves incorporating a new U.S. company, followed by transferring shares from the Indian parent company (which must be a Private Limited Company) to the newly formed U.S. entity. The Indian company would become a subsidiary of the U.S. company, and there is no such limit to the number of subsidiaries an entity can have.

Difference between Company registration in India & USA

Keep in mind the compliances and FEMA guidelines to be adhered to during this process, which establishes the U.S. company as a subsidiary of its Indian counterpart, creating a legal and financial separation. The benefits of this approach include improved access to U.S. markets, legal autonomy for each entity, and strategic financial advantages.

Incorporation in the U.S. Company Registration in India
Time Duration 4–5 Days (To get a COI) 7–10 Days(To get a COI)
Cost Ideally, it ranges around $200–500, including Government Fees, Professional Fees, etc. Depends on company type, professional fees, stamp duties, etc.
Registered Agent Required for legal correspondence Not Mandatory
Ideal for If you want to raise funds in the U.S. or expand, then U.S. incorporation is advisable. If your targeted market is in India, then registering your company in India is advisable.
Name Approval Simultaneous real-time search and reservation. Company Name Search and Reservation happen separately
Documentation COI, EIN, Company Bylaws, etc. COI, Articles of Association (AoA), Memorandum of Association (MoA), Director's Identification Number (DIN), etc.
Compliances Federal and state-level compliances, annual reports, IRS filings Registrar of Companies (RoC) filings, Annual General Meetings (AGMs), Income Tax Returns

{{pvt-cta}}

*Prices and documents can differ based on the company type.

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

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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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.
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#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/