Value Revealed: How Much Does It Cost to Incorporate a Company in India

Many business owners incorporate their businesses to protect their assets in case of problems. It’s only one of the many catchy benefits of incorporating. Yet why do many hesitate on doing it?

It’s a lot of hassle. Incorporation requires a lot of paperwork. Further, it costs too much. Of course, these costs depend on your company size. If you are here to know how much does it cost to incorporate a company, then we’ve got just the right information for you. Learn more about the formation and incorporation of a company in India.

How Much Does It Cost to Incorporate a Company: Everything You Need to Know

Incorporation costs differ in every business type. Furthermore, additional costs would apply if you want to hire a legal and financial consultant to help ease the process. We’ve gathered here the most common costs of incorporation.

Start-Up Costs

If you are starting a company in a corporate business structure, you will incur start-up costs. This includes expenses on research, making business plans, borrowing costs, promotion, and employee expenses. On average, firms need a start-up capital of INR 150,000. This will change depending on the type of industry you’re entering and how big or small your company is.

Registration Costs

These are the fees you pay to get a license to operate. Every business needs to register, otherwise, the business would be illegal. This is done so that government agencies can identify business and regulate them.

Many entrepreneurs are hesitant to push incorporating because they fear they would have to pay high costs and fees to register. The Indian government has heard this and repealed some tedious requirements that increased incorporation fees. In 2019, there are no more minimum required authorized shares to be issued. 

Depending on the number of directors, members, and authorized share capital, the cost of registering a company would range from INR 6,000 to 30,000. This would vary depending on your business. 

If you’re involved with importing or selling products, you will have to register for Goods and Service Tax (GST) and Value Added Tax (VAT). Businesses involved in providing professional services will register for Professional Tax and Employees’ Provident Fund (EPF). If qualified as Small and Medium Enterprise (SME), you will have to undergo SME registration. These fees will go from INR 1,500 to 15,000.

Professional Fees

If you wish not to be bothered by all the stress of running around submitting required files, you can opt to hire someone to do the process for you. You could also use a professional’s input on your decisions, so you can consult experts about financial and legal matters. We call these fees professional fees. 

Professionals go by hourly fees, but sometimes they also have fixed fees. The financial advisor’s fee runs from INR 10,000 to 30,000 per hour. This is for about 2-3 hours of consultation for a month. Legal consultation starts at the rate of INR 1,000.

Other Fees

The costs mentioned above still does not include the miscellaneous fees you also have to pay for. These fees include Documentary Stamp Tax (DST) paid on document acceptance or transfer. Upon registration, you also have to pay for local taxes and clearance documents. These fees will vary depending on the documents processed and the place where you process them.

Takeaways in Business Incorporation

Incorporating your company has its perks. Corporations protect their owners from lawsuits and liabilities when things go wrong. Further, it’s much easier to raise capital as a corporation. Lastly, corporations are more credible. Financial institutions like banks trust corporations more than other business forms. 

Incorporating a business is very challenging. It takes time, patience, and persistence. When faced with difficulties, you just have to remember why you’re doing it in the first place. Your goal is to put up a corporation, you have got to achieve that. It will all pay off later.

Do you need assistance in processing the registration of your company? Do you need advice on your decision to incorporate it? 3E Accounting India is the right solution for you. We are a prominent India accounting firm providing expert care to businesses. Contact us today!