Starting a business in India
Start with the business structure that best suits your requirements. Compare a private limited company, LLP, one person company, partnership firm and proprietorship on what each one costs you every year.
- 10,000+ Businesses served
- 100% Satisfaction Guarantee policy
- 4.7/5 Ratings On Google
Which one is yours?
- You are the only owner and want the least paperworkSole Proprietorship Firm
- You are the only owner but want limited liabilityOne Person Company
- Two or more partners, with a lighter filing loadLimited Liability Partnership
- You plan to raise investmentPrivate Limited Company
- A foreign company is setting up in IndiaIndian Subsidiary
The five structures most Indian businesses choose
The popular structures are the proprietorship firm and the partnership firm, alongside corporate entities such as the private limited company, the one person company and the limited liability partnership. They differ most in who carries the liability and how much you have to file each year.
Private Limited Company
The structure investors expect. Liability is capped at what each shareholder put in, shares can be issued to raise funds, and the company carries on regardless of who owns it.
Learn moreLimited Liability Partnership
A hybrid of the company and the partnership firm. Partners run it under an agreement of their own making, while personal assets stay out of reach of the business. Common for professional consultancies.
Learn moreOne Person Company
Full corporate status for a single owner. It is a private limited company in law, so liability is limited and the entity is separate, but one person holds it and no annual general meeting is required.
Learn morePartnership Firm
Two or more people sharing the profits of a business they run together, under a deed rather than a filing with the MCA. The lighter compliance load is what makes it work at a small and medium scale.
Learn moreSole Proprietorship Firm
Where most Indian entrepreneurs begin. One owner, no separate legal entity and the least paperwork of anything on this page, in exchange for unlimited personal liability.
Learn moreStill not sure which one is yours?
Tell us what the business will do, who is involved and what you expect to raise. We will tell you which structure fits and what it commits you to.
Entities registered for a specific purpose
These are not alternatives to the five above. Each exists for one situation, and a reader who needs one usually knows it already.
Indian Subsidiary
For a foreign company or foreign national entering the Indian market. The Indian arm is registered as a corporate structure in its own right, which is the cleanest route to trading here.
Learn moreSection 8 Company
Registered for a charitable object rather than for profit. Unlike a trust it is a corporate body, so it carries limited liability and a separate existence of its own.
Learn moreProducer Company
Formed by ten or more individuals engaged in primary produce, usually farming. It gives a producer group corporate status while ownership stays with its active members.
Learn more
Compare all five structures
The structure you pick decides who is liable for the debts, how much capital you bring in, how profits are taxed and how much you file every year. Here are all eleven attributes side by side, and liability, capital and compliance load are where the five genuinely differ.
| Attribute | Private Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Proprietorship Firm |
|---|---|---|---|---|---|
| Setting it up | |||||
| Applicable law | Companies Act, 2013 | Companies Act, 2013 | LLP Act, 2008 | Indian Partnership Act, 1932 | No specified Act |
| MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the LLP Act | OptionalCan be registered or unregistered, though there are clear benefits to registering with the State ROF | Not requiredMSME or GST registration is treated as valid proof for a proprietor firm | |
| 2 to 200Excluding present or former employees who are members | Only 1A single shareholder | 2 to unlimitedMinimum 2 designated partners, no cap on the total | 2 to 50Minimum 2 partners, maximum 50 | Only 1The proprietor is the sole owner | |
| AllowedUnder RBI and FEMA rules, usually via the automatic route | Not allowedMember, nominee and director must be Indian residents | AllowedUnder RBI and FEMA rules, usually via the automatic route | AllowedAn NRI can be a partner, subject to RBI regulations | Not allowedA foreign national cannot own a proprietorship business in India | |
| What you are liable for | |||||
| YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | NoThe firm has no identity separate from its partners | NoProprietor and business are the same, and share one PAN | |
| LimitedLimited to the share capital subscribed, unless the MOA defines it otherwise | LimitedLimited to the share capital subscribed | LimitedLimited to the contribution agreed in the LLP agreement | UnlimitedPartners are jointly and severally liable for the debts | UnlimitedClearing the firm’s liabilities is the proprietor’s job | |
| YesSurvives a change of ownership or management | YesBut it can only ever have one owner | YesA change of partners does not affect the LLP | NoA change of partner dissolves or reforms the firm | NoDeath or insolvency of the proprietor ends the business | |
| YesShares transfer easily, which is why external investors prefer it | Restricted100% of shares must move to change the single owner | YesBy consent of the other partners, via a supplementary deed | RestrictedThe partnership deed sets out the restrictions | NoA proprietorship cannot be transferred | |
| What it costs you every year | |||||
| MandatoryAn auditor must be appointed within 30 days | MandatoryAn auditor must be appointed within 30 days | As applicableRequired once turnover crosses ₹40 lakh or contribution crosses ₹25 lakh | Not mandatoryTax audit applies based on turnover | Not mandatoryTax audit applies based on turnover | |
| Moderate25% for companies with turnover up to ₹400 crore | Moderate25% for companies with turnover up to ₹400 crore | High30% on business profits, with tax-efficient distribution to partners | High30% on business profits | LowTaxed at the proprietor’s individual income tax slab | |
| HighThe heaviest of the five, both annual and event based | HighSimilar to a company, without an AGM | ModerateAnnual filing plus a few event based filings, lighter than a company | LowAn annual ITR, and little else | LowNo separate ITR, and very little else | |
| Next step | Know more | Know more | Know more | Know more | Know more |
Swipe the table sideways. Open any attribute to read the detail behind all 5 answers.
Common questions
Still have a question? Our team is happy to help, at no charge and with no obligation to buy anything.
Which steps should be taken to register a business in India?
Settle what the business will actually do and what capital it needs before anything is filed. Those two answers, together with whether there are partners, are what decide the structure.
From there the sequence is the same for every corporate entity: obtain digital signatures for the proposed directors or partners, reserve the name with the MCA, file the incorporation forms with the constitutional documents, and receive the certificate of incorporation. A proprietorship firm has no MCA filing at all and is established through its activity-based registrations instead.
Is business registration mandatory for all businesses?
It depends on the structure. Every corporate entity, which means a private limited company, a one person company, an LLP and a section 8 company, exists only once it is registered, so for those it is not optional.
A proprietorship firm is the exception. There is no registration that creates it, and it is recognised through the registrations its activity requires, such as GST, shop and establishment or Udyam. Most proprietors still register at least one of those, because a bank will not open a current account in the business name without it.
What should be considered while choosing the right business entity?
Start with whether anyone else is involved. A sole proprietorship and a one person company are for a single owner; everything else needs two or more people.
Then the capital. Where a business needs outside funding, a corporate structure is what allows it to be raised against shares.
The aspect most often missed is what happens after registration. Tax treatment and the annual compliance load differ sharply between these structures, and they are a permanent running cost rather than a one-off. The comparison table above sets both out.
What amount of capital should be introduced for starting a business?
There is no fixed answer, because it follows the activity and its scale, and a wholesale or retail business needs a very different figure from a services business.
The practical method is to work out the first year of expenses and commitments and start from that, then check it against the minimum the chosen structure requires.
What are the common steps after registration?
Registration is the beginning of the legal requirements rather than the end of them. Most new businesses need some combination of GST registration, a shop and establishment registration, and a trademark application to protect the name they have just registered.
- Open a current account in the business name
- Register for GST where turnover or activity requires it
- Obtain the shop and establishment registration for the state
- File for a trademark on the business name and logo
- Add activity-specific registrations such as Import Export Code or FSSAI
Is any approval required for business registration?
Each structure is registered under the law that governs it, so approval from that authority is part of registration itself. A company and an LLP are approved by the MCA.
Some activities need a separate approval before the business can be registered at all. Stockbroking, banking activity and insurance agency work require prior clearance from the regulator concerned, which is SEBI, the RBI or IRDAI. Those come first, not after.
Browse another category
Every service LegalWiz.in offers, grouped by what you are trying to do.
- Intellectual Property9 servicesSecure the name, logo, invention or creative work your business is built on.
- Change in Business22 servicesConvert your entity, update your MCA records, or close down cleanly.
- Tax Registrations and Filings16 servicesEvery registration and return your business owes: GST, income tax, PF, ESI and more.
- Legal Services45 servicesLawyer-drafted contracts, letters and policy kits, ready to use.
- Accounting & Compliance7 servicesBooks, payroll and annual filings handled, so nothing quietly lapses.
Not sure which structure to register?
A short conversation is usually enough to settle it. Tell us what the business does and who is involved, and we will tell you what fits and what it commits you to.
Talk to an expert- Secure payment
- Prompt support
- Fully online
- No hidden fees