Business Organisation and Registration

General information about Indian law, not legal advice, and not an official government tool. It does not determine the structure suitable for any particular business. Rules, forms and thresholds change.

Comparing business structures

Six common ways to carry on a business in India, differing in legal identity, liability, ownership, how capital is raised, compliance and tax treatment.

Comparison of Indian business structures
Factor	Sole proprietorship	Partnership	LLP	OPC	Private company	Public company
Separate legal identity	No. The business and the owner are legally the same person.	No. The firm is not separate from its partners.	Yes. An LLP is a body corporate.	Yes. It is a company.	Yes. It is a company.	Yes. It is a company.
Owners	One individual.	Two or more partners. The maximum number of partners is currently 50.	Minimum two partners, with no maximum.	Exactly one member, who must appoint a nominee.	Minimum two members, with a maximum of 200 (excluding certain employees).	Minimum seven members, with no maximum.
Management	The owner.	Partners, as set out in the partnership deed.	Partners; at least two designated partners with specific compliance responsibilities.	Director(s); at least one director is required.	Board of directors; minimum two directors.	Board of directors; minimum three directors.
Liability of owners	Unlimited, extending to personal assets.	Unlimited, and partners are jointly and severally liable.	Generally limited to the agreed contribution, with exceptions such as fraud or a partner's own wrongful acts.	Limited to the amount unpaid on shares held.	Limited to the amount unpaid on shares held.	Limited to the amount unpaid on shares held.
Governing law	No entity-specific statute.	Indian Partnership Act, 1932.	LLP Act, 2008.	Companies Act, 2013.	Companies Act, 2013.	Companies Act, 2013.
How it comes into existence	No incorporation. Activity-based registrations apply.	By agreement between partners. Registration with the Registrar of Firms is optional, but an unregistered firm faces limits on enforcing rights in court.	Incorporation with the Registrar through the MCA portal, with an LLP agreement.	Incorporation with the Registrar through the MCA portal.	Incorporation with the Registrar through the MCA portal.	Incorporation with the Registrar through the MCA portal.
Ownership transfer	The business cannot be transferred by share transfer; assets are sold or the business is assigned.	Admission or exit of partners follows the deed and partners' consent.	Governed by the LLP agreement.	Restricted. The member can be changed only in the ways the law permits.	Shares are transferable, subject to restrictions in the articles.	Shares are generally freely transferable, subject to the articles and the law.
Raising outside capital	Limited to the owner's funds and borrowing.	Limited to partners' capital and borrowing.	No equity shares. Capital comes as partner contributions or loans.	Limited. A single-member structure cannot admit outside equity investors without changing form.	Can issue shares privately to investors, subject to the law and the articles.	Can invite the public to subscribe to shares, subject to the law.
Statutory audit	Not required by an entity law. A tax audit may apply under the Income-tax law.	Not required by the Partnership Act. A tax audit may apply.	Required only if turnover or contribution exceeds the prescribed thresholds. A tax audit may separately apply.	Required, as for other companies.	Required.	Required.
Annual filings with the Registrar	None.	None as a rule. If the firm is registered, changes are notified to the Registrar of Firms.	Annual return and statement of account and solvency.	Financial statements and annual return.	Financial statements and annual return.	Financial statements and annual return.
Compliance load	Lightest entity-level formalities.	Light.	Moderate.	Moderate. Fewer meeting requirements than other companies.	Higher: board and general meetings, registers and filings.	Highest of the company forms.
Taxation (general)	Income is taxed in the owner's hands.	Taxed as a firm under the Income-tax law, with rules for partner remuneration and interest.	Taxed as an LLP under the Income-tax law.	Taxed as a company.	Taxed as a company; dividends are taxed again in shareholders' hands.	Taxed as a company; dividends are taxed again in shareholders' hands.
Often considered when	A single owner starts a small business with minimal formality.	Two or more people start a business and want flexibility.	Owners want limited liability with a flexible internal structure.	A single founder wants a company structure.	A business expects investors or wants a company structure with several owners.	A business plans to raise money from the public or list its shares.

Governing law: Sole proprietorship: No dedicated statute; registrations depend on the activity; Partnership: Indian Partnership Act, 1932; LLP: Limited Liability Partnership Act, 2008; OPC: Companies Act, 2013 (Sections 2(62) and 3) and Companies (Incorporation) Rules, 2014; Private company: Companies Act, 2013; Public company: Companies Act, 2013

Questionnaire

Answer a few questions to see which structures your stated circumstances point towards, which need attention, and which do not meet a requirement you have stated. Nothing you select is stored or sent.

Incorporation journey

The usual sequence for each structure, summarised. Steps vary with the facts and with changes to the process.

Decide the activity and the placeIdentify the business activity and the premises it will operate from.
Obtain a PAN and open a bank accountThe proprietor's own PAN is used. A separate current account is commonly maintained for business.
Activity-based registrationsDepending on the activity, registrations such as GST, a shops and establishment licence, or sector-specific licences may be needed.
Maintain recordsKeep books of account and prepare for income-tax compliance in the proprietor's name.

Agree the termsPartners decide capital, profit sharing and roles.
Draft the partnership deedThe deed records the terms. It is normally in writing and stamped as the State law requires.
Obtain a PAN for the firmThe firm applies for its own PAN.
Optional registrationA firm may be registered with the Registrar of Firms of the State. Registration is optional but affects the firm's ability to enforce rights in court.
Open a bank account and take other registrationsComplete the registrations the activity requires, such as GST.

Decide partners and designated partnersAt least two partners, with at least two designated partners, of whom at least one is resident in India.
Obtain digital signatures and director/partner identificationPartners need digital signature certificates and identification numbers as the process requires.
Reserve the namePropose a name for approval through the MCA portal.
File the incorporation documentsIncorporation is filed electronically with the Registrar.
Certificate of incorporationThe Registrar issues the certificate once the documents are approved.
File the LLP agreementThe LLP agreement is filed with the Registrar within the time the rules prescribe.
Post-formation registrationsObtain PAN, TAN, bank account and any activity-based registrations.

Check eligibilityThe member and the nominee must each be a natural person who is an Indian citizen resident in India. A person can be a member of only one OPC at a time.
Appoint a nomineeA nominee must consent in writing.
Obtain digital signature and director identificationNeeded for the director.
Reserve the nameThe name must carry the OPC designation as the Rules require.
Incorporate through SPICe+The integrated SPICe+ web form, with its linked forms, is used for incorporation and related registrations.
Certificate of incorporationIssued by the Registrar. PAN and TAN are allotted through the process.
Post-incorporation stepsAppoint the first auditor and open a bank account. Commencement and other requirements follow the Act and Rules.

Decide members and directorsAt least two members and two directors, with at least one director resident in India.
Obtain digital signatures and director identificationNeeded for proposed directors.
Reserve the namePart A of the SPICe+ form is used for name reservation.
Prepare charter documentsMemorandum and Articles of Association, in the prescribed electronic format.
Incorporate through SPICe+Part B of the SPICe+ form, with linked forms, covers incorporation and several registrations.
Certificate of incorporationIssued by the Registrar. PAN and TAN are allotted through the process.
Post-incorporation stepsAppoint the first auditor, open the bank account, issue share certificates, and make commencement and other filings as the law requires.

Decide members and directorsAt least seven members and three directors.
Obtain digital signatures and director identificationNeeded for proposed directors.
Reserve the name and prepare charter documentsName reservation and the Memorandum and Articles of Association.
Incorporate through SPICe+Incorporation is filed electronically.
Certificate of incorporationIssued by the Registrar.
Post-incorporation stepsAppoint the first auditor and satisfy the additional requirements that apply to public companies. Offering shares to the public or listing is regulated separately, including by SEBI.

Information and documents

An indicative list of what is typically required.

General information

Proposed name options
Nature of business activities
Intended registered office or place of business
Proposed capital or contribution of each owner

Identity and address of each owner, director or partner

PAN (mandatory for subscribers and directors in company incorporation)
Photo identity proof
Address proof
Email address and mobile number
Digital signature certificate, where the process requires it

Ownership information

Details of shareholding, partnership interest or contribution
Relationship, if any, between owners and directors
Details of other directorships or partnerships, where applicable

Proof of the business address
Documents for the activity-based registrations that apply

Partnership deed
Proof of the business address
PAN of the firm and of each partner

LLP agreement
Proof of the registered office
Consent of each designated partner

Nominee's consent and identification
Proof of the registered office, with the owner's consent to its use
Declaration and consent of the director

Memorandum and Articles of Association
Proof of the registered office, with the owner's consent to its use
Consent and declarations of each director

Memorandum and Articles of Association
Proof of the registered office
Consent and declarations of each director

This checklist is indicative. Requirements depend on the entity, the owners and the transaction. This website does not ask you to upload documents or send identity details.

Obligations after formation

The main categories that follow formation. Not every obligation applies to every entity.

Obligation	What it involves
Accounting records	Maintain books of account suited to the business.
Income tax	Return of income in the proprietor's name. A tax audit may apply under the Income-tax law.
Other registrations	GST returns and other compliances where registered.

Obligation	What it involves
Accounting records	Maintain books of account.
Income tax	Return for the firm. A tax audit may apply.
Partnership deed	Keep the deed updated for changes among partners.
Other registrations	GST returns and other compliances where registered.

Obligation	What it involves
Annual return (Form 11)	Filed with the Registrar. The Rules prescribe a due date of 60 days from the close of the financial year.
Statement of Account and Solvency (Form 8)	Filed with the Registrar. The usual due date is 30 October.
Audit	Required where turnover exceeds the prescribed threshold (currently Rs 40 lakh) or contribution exceeds the prescribed threshold (currently Rs 25 lakh).
Income tax	Return for the LLP. A tax audit may separately apply.
Partner changes	Intimation of changes in partners and designated partners.

Obligation	What it involves
First auditor	Appointed within the period the Act prescribes after incorporation.
Financial statements and annual return	Filed with the Registrar each year.
Statutory records	Maintain registers and minutes as required.
Director KYC	Updated as the rules require.
Income tax and other registrations	Return of income; GST and TDS compliance where applicable.

Obligation	What it involves
First auditor	Appointed within the period the Act prescribes after incorporation.
Statutory audit	Required every year.
Financial statements and annual return	Filed with the Registrar each year.
Meetings and records	Board meetings, a general meeting, statutory registers and minutes.
Director KYC	Updated as the rules require.
Income tax and other registrations	Return of income; GST and TDS compliance where applicable.

Obligation	What it involves
First auditor	Appointed within the period the Act prescribes after incorporation.
Statutory audit	Required every year.
Financial statements and annual return	Filed with the Registrar each year.
Meetings and records	Board meetings, general meetings, statutory registers and minutes. Additional requirements apply to public companies.
Director KYC	Updated as the rules require.
Income tax and other registrations	Return of income; GST and TDS compliance where applicable.

Frequently asked questions

Which business structure should I choose?

No single structure suits every business. The choice depends on the number of owners, the importance of limited liability, whether outside investment is expected, the compliance the owners can manage, and tax considerations. The comparison and questionnaire on this page set out the factors.

Does an LLP or a private company pay less tax?

Both are taxed under the Income-tax law, but the rules, rates and treatment of distributions differ. A comparison depends on the amount and nature of income and should be computed for the year concerned.

Can a non-resident or foreign national be an owner?

In some structures, yes, with conditions. For example, an LLP needs at least one designated partner resident in India, a private company needs at least one resident director, and an OPC is open only to resident Indian citizens. Foreign investment is subject to the Foreign Exchange Management Act and related rules.

Is there a minimum capital requirement?

For private and public companies, the Companies Act no longer prescribes a minimum paid-up capital, though a company limited by shares must still have share capital. Other laws or sector regulators may impose their own requirements.

How long does incorporation take?

The time depends on the entity, the completeness of documents, name availability and processing by the authorities. This website does not state a fixed time.

Is a company required to have an auditor?

Yes. Every company must have its accounts audited, and the first auditor is appointed shortly after incorporation. The Companies Act, 2013 contains the rules.

Can an OPC later become a larger company?

The Companies Act and the Rules provide for conversion of an OPC to another form of company, subject to conditions. The conditions have changed over time, so the current Rules should be checked.

What changes if I begin as a proprietor and later incorporate?

Incorporation creates a new legal entity. Existing contracts, registrations, licences and assets may need to be transferred or re-registered, and the tax treatment of the transfer should be reviewed.

Official sources and limits

This guide states no fees, timelines, tax savings or outcomes. It was last reviewed in October 2026.