Comparative list of different types of business structures in India
| Company Type | Best Suited For | Tax Benefits | Legal Compliance Requirements |
| Limited Liability Partnership (LLP) | Service-based ventures or firms with modest capital needs | Eligible for 3-year tax holiday under Startup India, and benefit on depreciation | Must file business tax returns and annual ROC returns |
| One Person Company (OPC) | Solo entrepreneurs aiming to reduce personal liability | 3-year Startup India tax holiday, enhanced depreciation, no dividend tax | Business tax return and ROC filing are mandatory |
| Private Limited Company | Growing businesses expecting high revenue | Tax holiday for first 3 years under Startup India, higher depreciation benefit | Requires business tax returns, ROC filings, and annual statutory audit |
| Public Limited Company | Large-scale enterprises with substantial turnover | Eligible for Startup India tax benefits for the initial 3 years | Business tax filing, ROC submission, and mandatory statutory audit required |
Importance of choosing the right business structure
Choosing the right business structure is crucial, as it directly affects your Income Tax Returns and overall compliance requirements.
Each business type comes with different regulatory obligations. For instance, a sole proprietorship is only required to file an income tax return. In contrast, a company must file both an income tax return and annual returns with the Registrar of Companies. Additionally, a company’s accounts must undergo a mandatory audit every year. Meeting these legal requirements often involves engaging auditors, accountants, and tax professionals, which incurs additional costs. Therefore, selecting an appropriate business structure is a critical consideration during company registration.
Certain business structures are more attractive to investors than others. Investors typically prefer enterprises that operate under a recognised legal framework. For example, they may be hesitant to invest in a sole proprietorship. Conversely, a promising business idea supported by a legally recognised structure—such as a Limited Liability Partnership (LLP) or a company—instils greater confidence and makes it easier to secure investment.
How to choose the right business structure for company registration in India
Here are some key questions every entrepreneur should consider before deciding on a business structure:
- How many owners or partners will your business have?
If you are the sole individual providing the initial investment, a One Person Company (OPC) may be the most suitable option. However, if your business has two or more owners and you intend to seek investment from external parties, a Limited Liability Partnership (LLP) or Private Limited Company would be a better fit. - Should your initial investment influence your choice of structure?
If you wish to keep initial costs low, a Sole Proprietorship, Hindu Undivided Family (HUF), or Partnership Firm may be appropriate. Conversely, if you are confident in recovering setup and compliance costs, you can consider an OPC, LLP, or Private Limited Company. - Are you willing to bear the full liability of the business?
Business structures such as Sole Proprietorship, HUF, and Partnership Firms carry unlimited liability. This means that in the event of any loan default, recovery can extend to the personal assets of the owners or partners according to their profit-sharing ratio, presenting a higher personal financial risk. - By contrast, Companies and LLPs offer limited liability, restricting members’ liability to their capital contribution or the value of the shares they hold.
- What income tax rates will apply to your business?
Income from a Sole Proprietorship or HUF is taxed according to standard individual slab rates, with business income combined with personal income. Other entities, such as Partnership Firms and Companies, are subject to a flat tax rate of 30%. - Are you planning to raise funds from investors?
Securing investment can be challenging for unregistered business structures. LLPs and Private Limited Companies are generally regarded as trustworthy and credible by investors. It is advisable to choose the appropriate structure carefully and seek professional guidance to ensure your business is registered correctly and is investor-ready.
Requirements for company registration in India
- Unique company name: Ensure the proposed name is distinct from existing registered companies or trademarks.
- Minimum directors: One for OPC, two for private, and three for public companies.
- Minimum members: One for OPC, two for private, and seven for public companies.
- Citizenship requirement: At least one director must be an Indian citizen, though foreign nationals can also be directors.
- Director Identification Number (DIN): All directors must obtain a DIN.
- Digital Signature Certificate (DSC): Directors and shareholders need a DSC for signing documents.
- Registered office: A physical address in India is necessary, typically in the state of incorporation.
- Memorandum of Association (MOA) and Articles of Association (AOA): Prepare these documents outlining the company's objectives and operational rules.
Company registration authorities in India
- Registrar of Companies (ROC): Office under the Indian Ministry of Corporate Affairs, administers various acts including Companies Act, 2013, Limited Liability Partnership Act, 2008, Company Secretaries Act, 1980, and Chartered Accountants Act, 1949.
- Ministry of Corporate Affairs (MCA): Oversees the administration of companies and LLPs in India.
- Central Registration Centre (CRC): Facilitates swift processing of incorporation, closure, and regulatory compliance filings.
- Centralised Processing for Accelerated Corporate Exit (C-PACE): Aims for expedited closure processes for companies.
- CPC (Central Processing Centre): Ensures speedy processing of applications and forms for incorporation, closure, alterations, and capital raising.
These authorities collectively streamline the regulatory procedures, promoting ease of doing business and facilitating the corporate ecosystem in India.
Documents required for company registration in India
The general documents required for the registration of an LLP, One Person Company (OPC), Private Limited Company, or Public Limited Company are outlined below:
Documents of Directors, Shareholders, and Partners
- Proof of Identity: All directors and shareholders (or partners, in the case of an LLP) must submit proof of identity. Any one of the following documents is acceptable:
- PAN Card
- Aadhaar Card
- Driving Licence
- Passport
- Proof of Address: All directors and shareholders (or partners, in the case of an LLP) must submit proof of address. Any one of the following is accepted:
- Recent telephone bill (not older than 2 months)
- Recent electricity bill (not older than 2 months)
- Bank statement showing the address
- DIN / DPIN and DSC: Directors (or partners, in case of an LLP) must have a Director Identification Number (DIN) or Designated Partner Identification Number (DPIN) and a Digital Signature Certificate (DSC).
Documents of the Company / LLP
- Proof of Registered Office: The following documents can be submitted to prove the company or LLP’s registered office:
- Tenancy or rental agreement between the landlord and the company/LLP
- No Objection Certificate (NOC) or permission letter from the landlord allowing the premises to be used as the registered office
- Sale deed of the office premises in the name of the company/LLP
- Memorandum of Association (MoA): Specifies the objectives of the company and the liability of its members.
- Articles of Association (AoA): Lays down the rules and by-laws for the company’s operation.
For further guidance:
- To know the documents required for incorporating a Private Limited Company, refer to our article on [Private Limited Company registration documents].
- To learn about documents for incorporating a Public Limited Company, see our article on [Public Limited Company registration documents].
- For details regarding LLP registration documents, read our dedicated article on LLP incorporation requirements.
Company Registration Process Online in India
Registering a company in India is now a straightforward 4-step process, and it is important to note that once your company is incorporated, you may also need to register for GST depending on your turnover and business activities.
Step 1: Digital Signature Certificate (DSC)
Since the company registration process is entirely online, a Digital Signature Certificate (DSC) is required to file forms on the MCA portal. DSC is mandatory for all proposed directors and the subscribers of the Memorandum of Association (MoA) and Articles of Association (AoA).
- DSC can be obtained from government-recognised certifying authorities.
- A list of approved authorities can be accessed here.
- It can also be obtained online within two days here.
- Directors and subscribers of the MoA and AoA must obtain a Class 3 DSC.
Step 2: Director Identification Number (DIN)
A Director Identification Number (DIN) is a unique identification number required for anyone intending to become a director in a company. The DIN of all proposed directors, along with their name and proof of address, must be provided in the company registration form.
- DIN can be applied for while filing the SPICe+ form, which is the company registration form.
- SPICe+ allows DIN allotment for up to three directors.
- If the company has more than three directors without a DIN, the company can be incorporated with three directors initially, and additional directors can be appointed later. These directors can obtain their DIN by filing the DIR-3 form, as only proposed directors of an existing company can apply for DIN through SPICe+.
Step 3: Registration on the MCA Portal
The company must reserve its name by submitting two proposed names in Part-A of the SPICe+ form. Name reservation is crucial because the SPICe+ form will be rejected if the proposed name:
- Is identical or similar to an existing company, LLP, or trademark, or
- Contains words prohibited under the Companies (Incorporation Rules), 2014.
To register the company:
- Complete the SPICe+ form and submit it on the MCA portal.
- The director must first register on the MCA portal to gain access to filing e-forms and viewing public documents.
- Once the name in Part-A is approved, it is reserved for 20 days. Within this period, Part-B of the SPICe+ form must be completed with company and director details, DSC attachment, and supporting documents before submission.
- If the name is not approved, a new SPICe+ form must be filed with the prescribed fee for a fresh name reservation.
Step 4: Certificate of Incorporation
After submission of the SPICe+ form along with the required documents:
- The Registrar of Companies will examine the application.
- Upon verification, the Certificate of Incorporation will be issued.
- The Certificate includes the PAN and TAN allotted by the Income Tax Department.
- An email is sent to the applicant with the Certificate of Incorporation attached, along with PAN and TAN details.
With this, the basic process of company registration in India is complete.
Company registration fees in India
| Company Type | Government Fees | Professional Fees | Additional Costs |
| Private Limited Company | Rs.7,000 to Rs.15,000 (based on authorised capital) | Rs.15,000 to Rs.25,000 (for CA or CS services) | Digital Signature Certificate (Rs.2,000), Director Identification Number (Rs.500 per person) |
| Public Limited Company | Rs.20,000 to Rs.50,000 (based on authorised capital) | Rs.30,000 to Rs.50,000 | Same as Private Limited Company, plus extra compliance-related costs |
| Limited Liability Partnership (LLP) | Rs.5,000 to Rs.10,000 | Rs.10,000 to Rs.20,000 | Cost of Digital Signature Certificate and LLP Agreement |
| One Person Company (OPC) | Rs.7,000 to Rs.15,000 | Rs.12,000 to Rs.20,000 | Digital Signature Certificate and Director Identification Number |
| Section 8 Company (Non-Profit) | Rs.5,000 to Rs.10,000 | Rs.20,000 to Rs.30,000 | Similar to other types, plus cost for Section 8 licence |
Time required for an online company registration in India
Typically, registering a company in India takes around 8 to 10 business days, assuming all documents are accurate and the business name is available.
If there is an objection raised during the process, the timeline may extend to up to 12 working days.
| Day | Activity |
| Day 1 | Make a booking and understand the documents required. |
| Day 2 - 3 | Document preparation and finalising. |
| Day 3 | Application of company registration. |
| Day 4 - 8 | Await for approval of application. |
| Day 8 - 12 | Registration approval or objection raised. |
Time required for an online company registration in Delhi
In India, registering a Private Limited Company typically takes 10-18 working days, provided all the required documents are submitted, and there are no complications. However, the actual time may vary depending on various factors such as the workload of government authorities, completeness of documents, and accuracy of information provided.
| Process | Estimated Time |
| Preparation of documents | 1 - 2 days |
| Obtaining Digital Signature Certificates | 1 - 3 days |
| Obtaining Director Identification Numbers | 1 - 2 days |
| Filing application with Registrar of Companies | 1 - 2 days |
| Verification and approval by ROC | 2 - 5 days |
| Issuance of Certificate of Incorporation | 1 - 2 days |
| Total | 7 - 14 days |
Please note that these are estimated times and can vary based on individual circumstances and government processing times.
Benefits of company registration
There are several advantages to registering your company. Let us look at some of them.
- Legal compliance: Company registration ensures that your business complies with all legal and regulatory norms. It makes it easy for you to file taxes, maintain records, and create trust among customers and investors.
- Access to government aid and subsidies: With company registration in place, your business can access government schemes and incentives such as MSME benefits, export incentives, and more.
- Easy expansion across states: With proper registration, businesses can easily expand their operations to other states, opening up new markets and customers.
- Protection of personal assets: Registering your company as a separate legal entity from yourself provides personal asset protection, shielding you from any liability in case of business losses or debts.
- Access to business loans: Banks and financial institutions require registered documents from your business to provide a business loan. With proper company registration, you can quickly secure loans for your business, accelerating growth and development.
Conclusion
Starting a business can be a daunting process, but with Bajaj Finserv Business Loan, you can achieve your entrepreneurial dreams with ease. Proper registration brings significant benefits such as legal compliance, access to government incentives, and access to business loans. If you are looking to start a business, ensure that you complete the registration process on time and with all the necessary documents to realise the benefits of being a legal business entity.
Apply for a Bajaj Finserv Business Loan today and finance your entrepreneurial dreams with ease. With Bajaj Finserv, you can get access to a business loan of up to Rs. 80 lakh, minimal documentation, faster disbursal, and flexible repayment options. You can also benefit from a competitive business loan interest rate, helping you manage repayments efficiently and keep your business financially sound. Do not let financial constraints slow down your business growth - apply now and take the first step towards achieving your entrepreneurial dream.
Helpful resources and tips for business loan borrowers
