The government registration fee is usually the first cost that comes to our mind particularly when someone mentions starting a business. Even though it’s an essential cost, this is just the start. Today, several business owners hold the view they have calculated, much to their surprise by unexpected expenses. In this blog post, let’s focus on the hidden costs of company registration in India so that you can plan your budget accordingly while avoiding unnecessary hurdles.
1. Professional Fees: A Need, Not a Bonus
Most people prefer to hire professionals like chartered accountants (CAs), consultants, or company secretaries, even though it is technically practical to register a business on your own. For what reason? Because of the difficulties involved in the process, mistakes might lead to delays or rejections.
Depending on the quality of service and the complexity of your business structure, these professional fees can range from ₹3,000 to ₹15,000 or more, depending on your service provider.
Tip: A breakdown of the charges should always be requested. You may be caught off guard when certain providers quote low prices but add GST or other hidden service charges.
2. Digital Signature Certificate (DSC): Small but Essential
Directors or shareholders must have a certificate of digital signature when completing online forms for company registration. It’s not free, but it’s essential. Each person must pay between ₹500 and ₹1,500 for a basic Class-3 DSC. This cost is also recurring since DSCs need to be renewed every two to three years.
3. Name Approval Delays: Additional Fees in Case of an Issue
When you avail of the RUN (Reserve Unique Name) service, you will get only a single opportunity for name approval per payment. The customer’s request might not be approved if the selected name is similar to an already-existing business or trademark. The ₹1,000 fee will not cover the cost of a professional’s time for each reapplication. Choosing a name that complies with MCA rules is important to avoid unnecessary denials and ongoing costs.
4. Stamp Duty Varies by State
Stamp duty is an additional hidden expense associated with company registration. Your state of incorporation and the type of company you choose (private limited, limited liability partnership, etc.) will determine how much you pay.
A company registered in Delhi may pay a different stamp duty than one registered in Maharashtra, for instance. Verify these rates in advance or speak with a local expert for advice.
5. Fees for notaries and affidavits
Although it’s not always required, you may occasionally be asked to produce notarized documents or affidavits, especially if your proof of address has a few minor issues or your identity proof is a little hazy. Depending on the location and number of documents needed, notarizing documents can cost anywhere between ₹200 and ₹1,000.
6. TAN and PAN Applications: Occasionally Not Included
Many online portals offer “all-inclusive” company registration packages, but if you look closely, you’ll see that some of them omit the PAN and TAN applications, which are necessary for your company to file taxes and operate legally.
The actual government fee is minimal (₹65 or so), but if this isn’t part of your original service package, you might end up paying a few hundred extra for these.
7. Costs of Compliance after Registration
The mere fact that your business is registered does not imply that it will stop spending. Following incorporation, you need to fulfill compliance obligations such as:
- Keeping up with required registrations
- Filing of annual returns
- Books and accounting services
Penalties may result from noncompliance, even if your company hasn’t yet begun to make money. It is wise to set aside at least ₹10,000 to ₹20,000 per year for these early-stage compliance services.
Conclusion
Undoubtedly, online systems have improved the efficiency of the Indian company registration process. However, under budgeting may result from concentrating only on government fees. In short, approach your startup budget the same way you would your business idea: do your homework, ask the right questions, and budget a little for those unanticipated costs that almost always come up. By doing this, you will start your business with information, confidence, and financial preparedness.