How to Start a Construction Company: A Step-By-Step Guide

May 7, 2025
Private Limited Company vs. Limited Liability Partnerships

India’s construction industry is one of the fastest-growing sectors, contributing significantly to economic development and job creation. With increasing urbanisation, government-led infrastructure projects, and rising demand for residential and commercial spaces, the sector presents a massive opportunity for entrepreneurs.

Starting a construction company today offers the potential for long-term profitability and the opportunity to contribute to the nation’s development journey.

But launching a successful construction company requires more than just technical know-how. It involves strategic planning, legal compliance, financial preparation, and effective operational execution.

This guide walks you through everything you need to know to start your own construction business in India.

Table of Contents

What is a Construction Business?

A construction business is involved in the planning, designing, constructing, and maintaining buildings and infrastructure. This includes residential properties, commercial complexes, roads, bridges, and industrial structures. Construction businesses manage everything from groundwork to the final delivery of projects.

There are several types of construction businesses, such as:

  • General Contracting Firms: Manage entire construction projects.
  • Specialised Trades: Focus on specific services like electrical work, plumbing, HVAC, or roofing.
  • Project Management Companies: Oversee project timelines, budgets, and subcontractors for clients.

Each type serves a distinct market and can be scaled based on expertise and demand.

Why Should You Start a Construction Company?

Starting a construction company can be both profitable and impactful. Here’s why:

  • High demand: Real estate growth, government infrastructure spending, and smart city developments keep demand steady.
  • Lucrative contracts: Projects often run into lakhs or crores, offering good revenue potential.
  • Entrepreneurial freedom: Be your own boss, choose your projects, and build your brand.
  • Job creation & impact: You directly contribute to community development by building homes, schools, hospitals, etc.
  • Long-term stability: A construction company can grow into a multi-city or even national operation with the right strategy.

Different Business Structures of a Construction Company

Choosing the right business structure is crucial, as it determines how your business is owned, taxed, and operated. Here are some common options in India:

  • Private Limited Company: Offers limited liability, legal recognition, and easier funding options; Ideal for medium to large construction firms.
  • Public Limited Company: Suitable for large construction firms planning to raise public funds; Requires more compliance and regulatory oversight.
  • Limited Liability Partnership (LLP): Offers flexibility with limited liability protection; Good for small to mid-sized firms with multiple partners.
  • One Person Company (OPC): Great for solo entrepreneurs who want to limit liability while maintaining full control.
  • Partnership Firm: Simple to set up; best suited for small businesses with limited investment and informal structures.
  • Subsidiary Company: A foreign company can establish a construction subsidiary in India, offering tax and operational benefits.

In New Delhi, the stamp duty on an LLP Agreement is charged at 1% of the total capital contribution.

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Benefits of Starting a Construction Company in India

The Indian market presents numerous advantages for construction entrepreneurs:

  • Massive Market Demand: The need for housing, commercial spaces, roads, and public infrastructure is growing rapidly.
  • Government Push: Schemes like AMRUT, Smart Cities Mission, and PMAY are fueling construction activity.
  • Urbanisation: Rapid growth in Tier 1 and 2 cities increases residential and commercial needs.
  • Real Estate Boom: Increased investment in the real estate sector drives demand for contractors and developers.
  • High Revenue Potential: Construction projects often have high profit margins if well-managed.

Requirements to Start a Construction Company

Here are the basic requirements to legally and effectively start your construction business:

  • Choose a Legal Structure (e.g., Pvt Ltd, LLP, Partnership)
  • Company Registration with the Ministry of Corporate Affairs (MCA)
  • PAN, TAN & GST Registration
  • Professional Tax and Labour Law Compliance
  • Business Bank Account for financial operations
  • Construction Licenses/Permits, such as contractor licenses, environmental clearances (if applicable)
  • ESIC and EPF Registration if you employ workers
  • Insurance Policies for worker safety and project liability

How to Start a Construction Company?

Here’s a step-by-step guide to starting your construction business:

  1. Conduct market research
    Understand demand, competition, and legal requirements in your target area.
  2. Write a business plan
    Include financial projections, service offerings, niche focus (residential, commercial, etc.), and marketing strategy.
  3. Choose your legal structure
    Decide whether a Pvt Ltd, LLP, or Partnership suits your needs best.
  4. Register your business
    Complete the incorporation process with the Registrar of Companies or local authorities.
  5. Obtain licenses and approvals
    Apply for necessary permits like a contractor license, GST, labour licenses, etc.
  6. Secure funding
    Consider business loans, working capital, or private investors to fund initial operations.
  7. Set up office & hiresStaff: Establish a physical office, recruit skilled workers, engineers, and subcontractors.
  8. Create branding & marketing strategy: Build a website, showcase past work, leverage social media, and network in local real estate circles.
  9. Build supplier & vendor networks: Establish relationships with material suppliers, equipment vendors, and service providers.
  10. Launch your services: Start bidding on projects and deliver quality work to build a reputation.

Documents Required for Construction Company Registration

Here’s a list of essential documents you’ll need for company registration:

  • Identity Proof: PAN card and Aadhaar card of all directors/partners.
  • Address Proof: Utility bill, passport, or driving license of directors/partners.
  • Business Address Proof: Rental agreement or electricity bill of office premises.
  • Company Documents:
  • Business Bank Account for financial operations
    • Memorandum of Association (MoA) & Articles of Association (AoA) for Pvt Ltd or OPC.
    • LLP Agreement for LLPs
    • Partnership Deed for partnership firms
  • Photographs: Passport-sized photos of all promoters.
  • Digital Signature Certificate (DSC): Required for online registration.
  • Industry-specific Licenses: Depending on your service type and region.

Conclusion

Starting a construction company in India is a solid business opportunity with high growth potential. With the country’s focus on infrastructure development and urban expansion, demand for skilled construction services continues to rise. From choosing the right business structure to complying with legal regulations, securing funds, and building a skilled team, each step is crucial.

With the right foundation, planning, and execution, your construction company can grow into a profitable, sustainable enterprise that shapes skylines and supports economic development.

Frequently Asked Questions

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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
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

How do I register as a construction company in India?

To register a construction company in India, follow these steps:

  1. Choose a Business Structure
  2. Name Reservation
  3. Obtain Digital Signatures (DSC)
  4. Company Registration with MCA
  5. Open a Business Bank Account
  6. Obtain GST Registration
  7. Apply for Construction-Specific Licenses
  8. Comply with Labour and Environmental Laws

How much does it cost to register a construction company in India?

The total cost of registering a construction company in India depends on factors like the business structure you choose (such as a Private Limited Company, LLP, OPC, or Partnership Firm) and your location. Each structure has different government fees and compliance requirements.

Additional expenses may include:

  • Digital Signature Certificates (DSCs)
  • Professional fees
  • GST registration
  • State-specific licenses or permits

Is GST registration mandatory for a construction company?

Yes, GST registration is mandatory if:

  • Your annual turnover exceeds ₹20 lakhs (₹10 lakhs in special category states).
  • You work on interstate projects or government contracts.
  • You want to claim the Input Tax Credit (ITC) on raw materials and subcontractor services.

Even if not mandatory by turnover, many construction businesses voluntarily register to benefit from ITC and credibility with clients.

What is the tax rate for construction companies in India?

Tax rates depend on your business structure and type of services:

  • Corporate Tax: 25% (plus surcharge and cess) for domestic companies under the new regime.
  • LLPs: 30% + applicable surcharge/cess.

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

Certificate of Commencement of Business: A Complete Guide

Certificate of Commencement of Business: A Complete Guide

Starting a business in India involves more than just registering a company name and opening a bank account. One of the most important legal steps for companies with share capital is obtaining a Certificate of Commencement of Business, as mandated by the Companies Act, 2013.

This certificate ensures that the company has met all preliminary legal requirements and is authorised to begin operations. It also helps maintain transparency, prevent fraudulent incorporations, and validate a company’s legal status in the eyes of regulators and stakeholders.

In this blog, we’ll walk you through everything you need to know about the Certificate of Commencement of Business- including its definition, significance, legal background, eligibility, documents required, filing procedure, and the consequences of non-compliance.

Table of Contents

What is a Certificate of Commencement of Business?

The Certificate of Commencement of Business is a mandatory legal document that certain companies in India must obtain before they start their business activities. It is issued by the Registrar of Companies (ROC) under the Companies Act of 2013, and applies specifically to public and private companies limited by shares.

Beyond legal compliance, this certificate also plays a big role in establishing trust. It shows investors, banks, and stakeholders that your company has met all foundational requirements and is operating within the bounds of the law. It also helps prevent fraudulent incorporations by ensuring that companies follow due process from the start.

Significance of Commencement of Business Certificate

The Certificate of Commencement of Business serves multiple purposes:

  • Legal Authorisation: It acts as formal approval for a company to start its operations.
  • Regulatory Compliance: Ensures adherence to the provisions of the Companies Act of 2013.
  • Prevention of Fraud: Minimises the risk of shell companies or fraudulent incorporations.
  • Credibility: Enhances trust with investors, financial institutions, and stakeholders.
  • Access to Funds: Allows the company to exercise borrowing powers and raise capital legally.

Commencement of Business under Companies Act 2013 – Old Act and Procedure

Under the Companies Act, 2013, companies with share capital cannot begin operations immediately after incorporation. While companies without share capital may commence business right after receiving the Certificate of Incorporation, those with share capital must secure a Certificate of Commencement of Business as per Section 11 of the Act and Rule 24 of the Companies (Incorporation) Rules, 2014.

This requirement is applicable to all newly formed public and private companies with share capital, highlighting the importance of meeting initial capital commitments and completing registration protocols before beginning operations or seeking external financing.

Position Under Erstwhile Companies Act, 1956

Previously, the Companies Act of 1956 governed the commencement of business for companies in India. Under this law, only public companies with share capital were required to obtain a Certificate of Commencement of Business. Private companies, on the other hand, were exempt and could begin operations immediately after incorporation.

The 2013 Act introduced more stringent rules, bringing private companies with share capital under the same requirements to enhance transparency and accountability.

Certificate of Commencement of Business Under Companies Act 2013

To obtain this certificate under the current law, companies must meet two critical requirements:

  1. Declaration by a Director: The director must declare that every subscriber to the memorandum has paid for the shares they subscribed to.
  2. Registered Office Verification: The company must file verification of its registered office with the ROC.

Only after fulfilling these conditions can the company apply for the certificate and begin lawful operations.

Eligibility Criteria for Commencement of Business Certificate

The Certificate of Commencement of Business (COB) is mandatory for the following categories of companies:

  • Companies Incorporated on or after November 2, 2018: Any company registered after this date is required to obtain the COB Certificate within 180 days from the date of incorporation.
  • Companies with Share Capital: Regardless of industry or business type, all companies with share capital must apply for and secure the COB Certificate before starting operations.

Which Company is Not Required to File a Certificate of Commencement of Business?

The following categories of companies are exempt from filing for the Certificate of Commencement of Business. These include:

  • Companies Incorporated Before November 2, 2018: This exemption applies to companies that were established prior to the implementation of the Companies (Amendment) Ordinance, 2018, specifically before November 2, 2018.
  • Companies Registered After November 2, 2018, Without Share Capital: Companies that were incorporated after November 2, 2018, but do not have a share capital structure, meaning they haven’t issued any shares, are also exempt from obtaining the COB Certificate.

Documents Required to Obtain Commencement of Business Certificate in India

To apply for the Certificate of Commencement of Business, companies must submit the following documents:

  • Form INC-20A: A declaration filed by a director.
  • Board Resolution: Approving the commencement of business.
  • Proof of Capital Subscription: Evidence that all subscribers have paid their share value.
  • Registered Office Proof: Utility bill or rental agreement confirming office address.
  • Certificate of Incorporation: Issued by the ROC.

Application Process for Commencement of Business Certificate

Here’s a detailed walkthrough:

  1. Log in to the MCA Portal
    Visit the official website of the Ministry of Corporate Affairs (MCA). Log into the MCA portal using your registered credentials (User ID and Password). If you are not registered yet, you must create an account first.
  2. Navigate to the e-Filing Section
    After logging in, go to the 'MCA Services' tab and select the 'e-Filing' option. This section contains all the necessary forms and submission options for company-related filings.
  3. Download and Fill out Form INC-20A
    Locate and download Form INC-20A- the specific form used for the Declaration of Commencement of Business. Carefully fill in all the required details, such as company information, paid-up share capital details, and confirmation of compliance with registration requirements.
  4. Select the Correct Corporate Identification Number (CIN)
    Enter and double-check the Corporate Identification Number (CIN) of your company. This number uniquely identifies your company and ensures the form is linked to the right entity.
  5. Attach the Required Documents
    Upload the necessary supporting documents, which typically include:
    • The director’s declaration that the subscribers have paid all share capital
    • Proof of registered office verification (such as a utility bill, rent agreement, or ownership document)
  6. Select the Correct Corporate Identification Number (CIN)
    Enter and double-check the Corporate Identification Number (CIN) of your company. This number uniquely identifies your company and ensures the form is linked to the right entity.
  7. Submit the Form and Pay the Prescribed Fee
    Once the form and attachments are ready, submit them through the portal. Pay the applicable government fee based on your company's authorised share capital. The payment can usually be made online through various options available on the MCA portal.
  8. Receive the Service Request Number (SRN)
    After successful submission, the system will generate a Service Request Number (SRN). Save this number carefully, it will help you track the status of your application and any future correspondence regarding your Certificate of Commencement of Business.

Time Limit for Filing the Declaration of Commencement of Business

As per Section 11 of the Companies Act, 2013, the declaration must be filed within 180 days from the date of incorporation. Failure to do so can lead to:

  • Penalties for the company and its officers.
  • Potential strike-off from the ROC register

Form INC-20A

Form INC-20A is the declaration form filed to confirm the commencement of business. It must be signed by a director and certified by a professional (CA/CS/CWA). The form includes:

  • Company details
  • Paid-up capital confirmation
  • Registered office address verification

Fee For Filing Form 20A and Receiving Commencement of Business Certificate

The fee for filing Form INC-20A depends on the company's authorised share capital:

Up to ₹1,00,000 ₹200
₹1,00,001 to ₹4,99,999 ₹300
₹5,00,000 to ₹24,99,999 ₹400
₹25,00,000 to ₹99,99,999 ₹500
₹1 crore and above ₹600

Consequences of Not Filing Certificate of Commencement of Business

Failing to file Form INC-20A within the 180-day window leads to:

  • Penalty of ₹50,000 for the company.
  • ₹1,000 per day penalty for each defaulting officer, up to ₹1 lakh.
  • ROC may strike off the company’s name if it remains inactive under Section 11(3).

Conclusion

Obtaining the Certificate of Commencement of Business is a critical step that validates your company's readiness to operate in India’s regulatory landscape. For public and private companies with share capital, understanding and complying with this requirement ensures legal clarity, business credibility, and uninterrupted growth. By following the correct process, submitting the necessary documents, and meeting deadlines, companies can avoid heavy penalties and begin their entrepreneurial journey on the right foot.

Frequently Asked Questions

rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business
rize image

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

Register your business

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


One Person Company
(OPC)

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

Private Limited Company
(Pvt. Ltd.)

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


Limited Liability Partnership
(LLP)

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

Frequently Asked Questions

Which Company Needs a Certificate of Commencement of Business?

All companies incorporated after November 2, 2018, are required to obtain a Certificate of Commencement of Business.

How to Download Certificate of Commencement of Business?

You can download the Certificate of Commencement of Business after your application (Form INC-20A) is approved.Here’s how:

  1. Login to the Ministry of Corporate Affairs (MCA) portal.
  2. Go to the MCA Services section.
  3. Click on View Public Documents.
  4. Enter your company’s CIN (Corporate Identification Number).
  5. Look for the approved Form INC-20A and download the certificate attached to the filing.

What is the Difference Between Incorporation and Commencement Certificate?

  • Certificate of Incorporation: This is issued when a company is legally created. It proves the company exists as a legal entity under the Companies Act.
  • Certificate of Commencement of Business:
    This is issued after the company fulfills specific post-incorporation requirements (like depositing the minimum share capital and verifying the registered office). It authorises the company to start business operations and borrow money.

Why is a Commencement Certificate Required?

A Commencement Certificate is important because:

  • It ensures the company has met its initial legal and financial commitments.
  • It prevents fraudulent incorporations by making sure real business intent is established.
  • It validates the company’s status with regulators, banks, investors, and other stakeholders.
  • Without it, a company cannot legally start business activities or raise funds, and risks penalties or even strike-off by the Registrar of Companies (ROC).

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.

Different Types of Companies in India - Complete Guide

Different Types of Companies in India - Complete Guide

Starting a business in India is an exciting and transformative journey, filled with opportunities to bring your ideas to life and create something impactful. However, one of the most crucial decisions you’ll face early on is choosing the proper business structure. Think of it as laying the foundation for your venture—get it right, and it supports your growth; get it wrong, and it could lead to unnecessary challenges down the line.

Each business type has its own advantages, legal responsibilities and operational requirements, making it essential to align your choice with your goals, resources and long-term vision.

In this blog, we’ll simplify the complexities, walking you through the different types of companies in India, their features, benefits and the documents required to get started.

Common types of companies in India and their classification

Table of Contents

What Are the Types of Business Entities?

India’s vibrant economy is home to diverse industries and entrepreneurial ambitions, necessitating a range of business entity options. From solo ventures to large-scale collaborations, the choice of business structure directly impacts a company's growth, legal compliance, tax obligations and operational efficiency.

There are different types of companies in India, ranging from individual ownership models to multi-member organisations, catering to various needs and scales. These include:

Types of Business Structures in India

India offers a variety of business structures to suit different entrepreneurial needs, scales and industries. Each structure has unique features, benefits and drawbacks, making it crucial to choose the right one based on your business goals. Let’s dive deeper into different types of businesses in India:

  1. Sole ProprietorshipA sole proprietorship is the simplest and most commonly adopted business structure in India, especially for small businesses or individual entrepreneurs. It is an unincorporated business owned and managed by a single person.
    Features:
    • No separate legal entity; the business is considered the same as the owner.
    • Unlimited liability: The owner's personal assets are at risk in case of debts.
    • Minimal compliance: Easy to set up and operate with fewer regulations.
  2. PartnershipA partnership is a business structure where two or more individuals share ownership, profits and responsibilities. It is governed by the Indian Partnership Act of 1932 and is ideal for businesses requiring diverse skill sets.
    Features:
    • Joint ownership and decision-making.
    • Unlimited liability for all partners unless specified otherwise in the partnership agreement.
    • No perpetual succession; the partnership dissolves upon a partner's death or withdrawal.
  3. Limited Liability Partnerships (LLP)An LLP blends the advantages of a partnership with the benefits of limited liability. Introduced under the LLP Act of 2008, it is ideal for professionals or small businesses looking for a flexible yet secure structure.
    Features:
    • Combines the flexibility of partnerships with limited liability protection.
    • A separate legal entity from its partners.
    • Requires at least two designated partners.
  4. Private Limited Companies (Pvt Ltd)A Private Limited Company is a favoured structure among startups and small-to-medium enterprises with several advantages. It is governed by the Companies Act of 2013 and allows for limited liability while offering scalability.
    Features:
    • Separate legal identity from its owners.
    • Limited liability for shareholders.
    • Eligibility to issue shares for raising funds.
  5. Public Limited CompaniesA Public Limited Company is suitable for businesses aiming to scale operations and raise public funds through shares. A company whose shares are publicly traded, with ownership open to the general public.
    Features:
    • Requires a minimum of seven shareholders and three directors.
    • No upper limit on the number of shareholders.
    • Vulnerable to market fluctuations.
  6. One Person Companies (OPC)Introduced under the Companies Act of 2013, an OPC caters to solo entrepreneurs seeking limited liability benefits. Simply put, a single individual owns the company while enjoying limited liability protection.
    Features:
    • Mandatory to appoint a nominee.
    • Limited liability for the owner.
    • Not eligible for equity funding.
  7. Section 8 Companies (NGOs)Section 8 Companies are nonprofit organisations formed under the Companies Act of 2013 to promote social welfare activities. These companies focus on charitable objectives like education, healthcare or environmental protection.
    Features:
    • Profits cannot be distributed as dividends.
    • Tax exemptions are available under specific conditions.
  8. Joint-Venture CompaniesA Joint- Venture (JV) combines two or more entities to collaborate on a specific project or goal. Partners share resources, expertise and profits while retaining their individual entities.
    Features:
    • Operates under a joint agreement for a specific purpose.
    • Temporary or long-term collaboration.
    • Shared financial risks.
  9. Non-Government Organisations (NGOs)NGOs are entities dedicated to social welfare causes, operating independently of the government. NGOs can be structured as trusts, societies or Section 8 Companies, focusing on various charitable activities.
    Features:
    • Operates without a profit motive.
    • May qualify for tax exemptions.
    • Drives social change and community development.

Types of Companies Based on Size

In India, companies can be categorized based on their size, typically determined by factors such as turnover, capital investment, and employee count. Here are the main types of companies in India based on size:

Here are the main types of companies based on members:

1. Micro Enterprises

Micro-enterprises are the smallest category of companies, characterized by low investment in plant and machinery or equipment. In India, micro-enterprises are defined as those with an investment of up to Rs. 1 crore in manufacturing and an annual turnover of Rs. 5 crore.

2. Small Enterprises

Small enterprises are slightly larger than micro-enterprises but still fall within the small-scale sector. In India, small enterprises are defined as those with an investment of not more than Rs. 10 crore and an annual turnover of not more than Rs. 50 crore.

3. Medium Enterprises

Medium enterprises are larger than small enterprises but smaller than large corporations. In India, medium enterprises are defined as those with an investment of more than Rs. 50 crore in manufacturing and an annual turnover of not more than Rs. 250 crore.

4. Large Enterprises

Large enterprises are the largest category of companies, characterized by substantial investment, high turnover, and a large workforce. In India, large enterprises have investments exceeding Rs. 50 crore in manufacturing or Rs. 250 crore in services. They often have hundreds or even thousands of employees and operate nationally or multinational.

These categories are defined by the Ministry of Micro, Small, and Medium Enterprises (MSME) in India to provide various benefits and incentives to small and medium-sized enterprises (SMEs), such as priority lending, subsidies, tax exemptions, and easier access to government schemes and programs.

Types of Companies Based on Liabilities

Companies can be categorized based on the extent of liability their members or owners have. Some major types of companies based on liabilities are-

1. Company Limited by Shares

A Company Limited by Shares is a type of company where the liability of its members is limited to the amount unpaid on their shares. This means that shareholders are not personally liable for the company's debts beyond the amount they have agreed to contribute towards the shares they hold.

Companies Limited by Shares can be further classified into private limited companies and public limited companies based on the number of shareholders and other criteria.

2. Company Limited by Guarantee

In a Company Limited by Guarantee, the liability of its members is limited to the amount they agree to contribute to the company's assets in the event of its winding up. This type of company is commonly used for non-profit organizations, clubs, societies, and associations.

3. Unlimited Liability Company

In an Unlimited Liability Company, the members or owners have unlimited personal liability for the company's debts and obligations. This means that their personal assets are at risk to satisfy the company's liabilities, and creditors can pursue the members' personal assets to settle debts owed by the company.

Types of Companies Based on Listing Status

Companies can also be classified based on their listing status, which refers to whether their shares are listed on a stock exchange for public trading.

1. Listed Companies

Listed companies are those whose shares are listed and traded on a recognized stock exchange, such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India.

These companies are subject to stringent regulatory requirements and disclosure norms mandated by the Securities and Exchange Board of India (SEBI). Listing provides liquidity to shareholders and enables the company to raise capital by issuing additional shares to the public.

2. Unlisted Companies

Unlisted companies are those whose shares are not traded on any stock exchange. These companies may be privately held, meaning that their shares are owned by a small group of shareholders or closely held by promoters and investors.

Unlisted companies are not subject to the same level of regulatory scrutiny as listed companies but may still be required to comply with certain statutory requirements under the Companies Act.

Types of Companies Based on Holding

Companies can be categorized based on their holding structure, which refers to the relationship between parent companies and their subsidiaries.

1. Parent Company

A parent company is a corporation that owns a controlling interest in one or more subsidiary companies. It typically holds more than 50% of the voting rights in the subsidiary companies and has the power to make decisions affecting their operations and strategic direction.

2. Subsidiary Company

A subsidiary company is a company that is controlled by another company, known as the parent company. Subsidiary companies can be wholly or partially owned by the parent company, depending on the percentage of shares held.

Subsidiary companies operate independently but are subject to the control and influence of the parent company.

3. Holdings Company

A holdings company is a company whose primary purpose is to hold investments in other companies rather than engage in operational activities. Holdings companies typically own shares in subsidiary companies and may provide their subsidiaries with strategic direction and financial support.

Unlike a parent company, a holding company does not engage in business operations of its own.

4. Affiliate Company

An affiliate company is a company that is related to another company through common ownership or control. Affiliate companies may be part of the same corporate group or have a strategic partnership with each other.

5. Associate Company

An associate company is one in which another company holds a significant but not controlling interest, usually between 20% to 50% of the voting rights. While the investing company has influence over the associate company's operations and management, it does not exercise full control.

Documents Required to Open Different Types of Business in India

Here’s a list of documents required to open a company in India:

  • Identity Proof: PAN card, Aadhaar card
  • Address Proof: Utility bill, rent agreement, or property papers
  • Business Registration Forms: Forms based on the business type (SPICe+, FiLLiP, etc.)
  • Digital Signature Certificate (DSC): For online submissions
  • Proof of registered office address: NOC or Rental Agreement

Additional documents may be required based on the business type, such as MOA and AOA for companies, LLP Agreements for LLPs or trust deeds for NGOs.

Conclusion

In India, the variety of business entities ensures there’s a fit for every kind of entrepreneur—whether you're a solo dreamer with a big vision, a small team building something impactful, or an organisation driven by social change.

Each type of entity offers unique features, advantages and challenges. From the simplicity of a sole proprietorship to the robust framework of private limited companies or the flexibility of LLPs, picking the right one can make your journey smoother, protect your personal assets and set you up for growth.

Think about your business goals:

  • Do you want to stay small and agile or scale into a large organisation?
  • Do you need investors or want to keep it self-funded?
  • Are compliance and taxes manageable?

Your answers to these questions will guide you toward the perfect fit. If you’re unsure where to start, don’t worry—many successful entrepreneurs were in the same place when they started. The key is to take it one step at a time.

Frequently Asked Questions

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Limited Liability Partnership
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  • Businesses seeking investment through equity-based funding


One Person Company
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1,499 + Govt. Fee
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Private Limited Company
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BEST SUITED FOR
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  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
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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 Type of Business Is More Profitable?

The profitability of a business depends on various factors, including the industry, business model and operational efficiency. For instance:

  • Technology startups have high profit potential due to scalability.
  • Service businesses, like consulting or digital marketing, often have low initial costs and high margins.
  • E-commerce can be highly profitable if inventory and logistics are managed efficiently.
  • Real estate and manufacturing tend to yield long-term gains but require significant capital.

Ultimately, the most profitable business aligns with the entrepreneur’s expertise and market demand.

Why Do Different Types of Businesses Exist?

Different types of businesses exist to cater to the diverse needs of entrepreneurs, industries and regulatory requirements.

  • Legal and financial considerations: Some businesses need limited liability, while others prioritise simplicity.
  • Operational scope: A sole proprietor might work well for small-scale operations, while large organisations need a corporate structure.
  • Growth potential: Some structures, like private limited companies, attract investors, while others, like partnerships, foster collaboration.

What Types of Businesses Are in Demand?

Currently, high-demand businesses include:

  • Technology and SaaS: Cloud computing, AI and software solutions.
  • E-commerce: Online retail continues to grow post-pandemic.
  • Health and wellness: Telemedicine, fitness and organic products are booming.
  • Sustainable businesses: Eco-friendly products and renewable energy.
  • Digital services: Marketing, content creation, and app development.

These industries reflect shifting consumer priorities and technological advancements.

What Are the Five Types of Business Organisations?

The five major types of business organisations are:

  • Sole Proprietorship: Owned and managed by one person; simple and cost-effective.
  • Partnership: Owned by two or more individuals sharing responsibilities and profits.
  • Limited Liability Partnership (LLP): A hybrid structure with limited liability and partnership benefits.
  • Private Limited: A separate legal entity that can raise capital by issuing shares.
  • Public Limited: Allows a company to offer shares to the general public, either on the stock market or privately.

What Is the Director Identification Number (DIN)?

The Director Identification Number (DIN) is a unique identification number assigned by the Ministry of Corporate Affairs (MCA) in India to individuals intending to serve as company directors. It is mandatory under the Companies Act of 2013.

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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