Choosing the entity before choosing the form
The question clients bring to a chamber in Kolkata is usually framed as "how do I register a company", but the decision that matters is made earlier: which entity. A private limited company, a limited liability partnership, a one person company and a partnership firm are not variations on the same theme. They differ in who owns the business, who is liable when it fails, how profits are taxed, how difficult it is to admit an investor, and how much annual compliance the entity must file even in a year with no transactions.
The statutory framework
Companies are incorporated under the Companies Act, 2013, with the rules made under it and the MCA21 filing system administered by the Ministry of Corporate Affairs. Limited liability partnerships are governed by the Limited Liability Partnership Act, 2008. Partnership firms are governed by the Indian Partnership Act, 1932 and are registered with the Registrar of Firms, which is a state function, not an MCA function. Proprietorships have no incorporation statute at all; they exist on the strength of tax registrations and licences.
The incorporation provisions that govern the actual filing are Sections 3 to 12 of the Companies Act, 2013, read with the Companies (Incorporation) Rules, 2014. Section 12 requires the company to have a registered office capable of receiving communication from the date of incorporation, and to display its name and other particulars at that office. Section 10 makes the certificate of incorporation conclusive evidence that the company has been duly registered.
Which entity fits which business
| Entity | Minimum requirements | Liability and tax | Best suited to |
|---|---|---|---|
| Private limited company | Two directors and two shareholders; no minimum capital | Limited liability; taxed at the company rate, with dividend taxed in the shareholder's hands | Businesses that expect investors, ESOPs, or institutional customers |
| One person company | One director and one shareholder, with a nominee | Limited liability; same corporate tax treatment | A single promoter testing a business before bringing in partners |
| Limited liability partnership | Two designated partners, at least one resident in India | Limited liability; partners taxed on profit share, no dividend distribution tax | Professional firms and family businesses that distribute profits rather than retain them |
| Section 8 company | Two directors; objects restricted to charitable purposes; licence from the Central Government | Limited liability; no dividend; exemptions on approvals and fees | Charitable, educational and research organisations needing a corporate form |
| Partnership firm | Two partners and a written deed; registration optional but advisable | Unlimited liability of partners; firm taxed at the firm rate | Small trading and professional ventures where capital and risk are modest |
The incorporation sequence
- Obtain digital signature certificates. Every director or designated partner needs a class 3 DSC issued against PAN and Aadhaar. Aadhaar-based e-signing can replace a DSC for some individuals, but a DSC is still needed for the company's own filings.
- Reserve the name. SPICe+ Part A reserves the name for twenty days, extendable once. The name must not be identical or too nearly resembling an existing company or LLP, must not be prohibited by the emblems and names rules, and should not infringe a registered trademark. Two proposed names, the objects, and the NIC codes are entered here.
- Prepare the constitutional documents. The memorandum in Table A of Schedule I for a company limited by shares, and articles adapted to the shareholding and board structure. For an LLP, the agreement under Schedule I of the LLP Act. Clauses that restrict transfer, create pre-emption rights among family shareholders, or fix remuneration to directors belong here, not in a side letter.
- File SPICe+ Part B. This is the incorporation application, carrying the registered office address, the subscriber and director details, the capital structure and the declarations. The eMOA and eAOA are filed with it, along with the declaration of compliance.
- File AGILE-PRO-S. The linked application simultaneously seeks GST registration where applicable, EPFO and ESIC registration, professional tax registration with the State, and a bank account. Taking it at this stage saves separate applications later, though each department may still raise its own query.
- Pay the fees and stamp duty. MCA fees depend on authorised capital, and stamp duty on the memorandum and articles is levied at the rates prescribed by the State where the registered office is situated. Under-stamping is a common cause of rejection or of a later demand.
- Receive the certificate of incorporation. The certificate carries the corporate identity number, the date of incorporation and the name. For a company with share capital, the declaration of commencement of business in INC-20A must be filed within 180 days, supported by proof that the subscribers have paid for their shares.
- Complete the first statutory acts. Hold the first board meeting within thirty days, appoint the first auditor within thirty days by board resolution and file ADT-1, adopt the statutory registers, and open the bank account in the company's name.
Documents the filing actually needs
- PAN and Aadhaar of every director, shareholder and subscriber.
- Passport-size photograph and address proof of each director — bank statement, electricity bill or telephone bill not older than two months.
- Identity proof: passport, driving licence or voter identity card.
- Proof of the registered office: ownership deed, or a rent agreement with the landlord's ownership proof and a utility bill.
- Digital signature certificates for all signatories.
- Memorandum and articles of association, or the LLP agreement.
- Declaration by the subscribers and the first directors.
- For an OPC, the nominee's consent in the prescribed form.
- For a Section 8 company, the objects clause, the estimated income and expenditure for three years, and the licence application.
- For a company with a foreign shareholder, the apostilled or consularised documents and, where applicable, the approval under the foreign exchange regulations.
Time and cost: a realistic picture
| Step | Typical duration | Cost element |
|---|---|---|
| DSC issuance | 1 to 3 working days | Per certificate, charged by the certifying authority |
| Name reservation | 2 to 7 days, longer if resubmission is required | MCA fee, modest for a small company |
| Incorporation filing to certificate | Commonly 7 to 21 days for a clean application | MCA filing fee plus State stamp duty on the MOA and AOA, which is the largest single statutory cost |
| GST and labour registrations through AGILE-PRO-S | 1 to 3 weeks after incorporation | No separate government fee for most of these |
| Bank account opening | 3 to 10 days after the certificate | Nil, subject to the bank's minimum balance requirement |
| INC-20A where applicable | Within 180 days of incorporation | MCA fee; delay attracts a penalty on the company and every officer in default |
| Annual compliance thereafter | AOC-4 and MGT-7 each year, DIR-3 KYC by 30 September | Professional fee plus MCA fees; a dormant company still files |
What goes wrong, and how it is fixed
The second recurring problem is the registered office. A company cannot be incorporated at an address where the promoter has no right to sit, and using a family residential address without documenting the right to use it creates a problem at the first GST verification. A rent agreement, the landlord's ownership document and a utility bill are the minimum, and where the premises are shared, a clear allocation of space in the agreement.
Kolkata specifics
Companies with a registered office in West Bengal are administered by the Registrar of Companies, West Bengal, whose office functions from the Nizam Palace complex on Acharya Jagadish Chandra Bose Road in central Kolkata. Filings are made electronically through the MCA21 portal, and physical correspondence with the registrar is now the exception rather than the rule. Applications for a Section 8 licence and for certain regional director approvals are routed through the same office.
Beyond the MCA, a Kolkata business needs the State registrations that make the company operable: professional tax registration with the Directorate of Commercial Taxes under the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979; shops and establishments registration under the West Bengal Shops and Establishments Act, 1963; a trade licence from the Kolkata Municipal Corporation for the categories that require one; and, for premises in Salt Lake or New Town, the clearances of the relevant development authority. A company can be perfectly incorporated and still unable to open a current account or obtain a GST certificate because one of these is missing.
How much capital do I need to start a private company?
There is no statutory minimum. The authorised capital determines the MCA fee and the stamp duty, so companies commonly start with a modest authorised capital and increase it later. What matters legally is that the subscribed capital is actually paid before the INC-20A declaration, because the declaration states that the subscribers have paid for their shares.
Can one person own and run a private company?
Not a private limited company, which needs two shareholders and two directors; the same person may hold both roles in different companies. A one person company allows a single member with a nominee. Many sole promoters incorporate an OPC and convert it to a private company when a second shareholder joins.
Is an LLP cheaper to maintain than a company?
Generally yes, in annual compliance — an LLP files a statement of account and solvency and an annual return, without the board meeting and audit architecture that applies to companies, though audit thresholds still apply above a turnover limit. The gap narrows if the LLP has substantial turnover or foreign investment.
Do I need a commercial premises to register?
You need an address at which the company can genuinely receive communication and which you are entitled to use. Residential addresses are accepted for incorporation, but GST registration at a residential address requires additional documents and may be refused for certain categories of business. A shop or office address with a proper agreement is the safer course.
Incorporation is the easy part; the documents that survive diligence are the ones an advocate drafts with the promoters' actual arrangement in mind. Advocate Panchanand Shaw, at 14 Hare Street, Kolkata 700001, opposite Bankshall Court, advises on entity choice, incorporation documents, shareholders' agreements and the statutory compliance that follows registration.