Setting up a private company looks like a form-filling exercise. In practice, the decisions taken in those first few weeks (who owns what, what the company is allowed to do, where it is registered, how much capital sits on paper) tend to follow the business for years. Fixing them later costs far more than getting them right at the start.
This FAQ covers the checks that matter most before, during and immediately after incorporation.
Is a private company the right structure for me?
A private company suits businesses that want limited liability, a clear separation between the owners and the business, and the ability to bring in investors or issue shares later. If you are two partners running a service practice with no plan to raise funding, a partnership or limited liability partnership may be cheaper to run and lighter on compliance.
The question to ask is not “which is easiest to set up” but “which structure will I still be comfortable with in three years”. A private company carries more annual filing work and more formality, and in exchange it gives you credibility with banks and customers, a cleaner ownership record, and a structure investors recognise.
How many people do I need to start?
A private company needs a minimum of two shareholders and two directors. The same two people can hold both roles. At least one director must ordinarily be resident in the country of incorporation, which is the point that most often trips up founders living abroad.
Before you finalise the list, be clear about the difference between the two roles. Shareholders own the business. Directors run it and carry the legal responsibility for its filings and conduct. Adding a family member as a director “just to make up the numbers” hands them real legal duties, and removing them later requires a formal process.
What should I check before choosing a name?
Name rejections are the single most common cause of delay. Three checks are worth doing before you apply:
First, confirm the name is not identical or closely similar to an existing company or limited liability partnership. Small differences in spelling, spacing or the addition of words like “India” or “Global” usually do not make a name distinct enough.
Second, run a trade mark search. A name can be available at the registry and still infringe someone’s registered mark, which means you could be forced to rebrand after you have printed stationery and built a website.
Third, check that the matching domain and social handles are free. There is no point securing a name legally if your customers cannot find you online.
It also helps to keep the name descriptive of what you actually do. Names that suggest regulated activities such as banking, insurance, investment management or asset management attract additional scrutiny and often require approval from the relevant regulator.
Does the registered office address really matter?
Yes, more than founders expect. The registered office determines which registry office handles your file, the jurisdiction for tax registrations and, in many cases, the state-level registrations you will need for employees.
The address must be one where you can actually receive official correspondence, and you must be able to produce proof of the premises together with the owner’s consent. A residential address is acceptable in most cases. A virtual office can work, but only if the provider genuinely forwards statutory notices, because missed notices are treated as served.
How much capital should the company start with?
There are two numbers and they do different jobs. Authorised capital is the ceiling on the shares the company is allowed to issue. Paid-up capital is what shareholders have actually put in.
There is no minimum paid-up requirement, so founders often start small. The point to think through is the authorised capital, because raising it later involves a shareholder resolution, a filing and a fee. Setting it a little above your realistic first-round needs is usually sensible. Setting it far too high simply means paying registration fees on capital you will never issue.
Equally important is how the shares are split. A fifty-fifty split between two founders sounds fair and creates deadlock the moment they disagree. Decide early how ties will be broken.
What goes into the constitutional documents?
The memorandum sets out what the company is permitted to do. The articles set out how it is governed internally. Most incorporations use standard templates, and most founders never read them.
It is worth reading the articles at least once, paying attention to how shares may be transferred, whether existing shareholders get first refusal, how directors are appointed and removed, and what majority is needed for key decisions. These clauses become extremely relevant the day a founder wants to exit or an investor wants protection.
On the objects side, describe your main activity accurately and allow room for adjacent lines of business you can foresee. Vague or wrongly drafted objects can cause problems when opening bank accounts or applying for licences.
Do we need a founders’ or shareholders’ agreement?
If there is more than one founder, yes. The articles govern the company. A shareholders’ agreement governs the relationship between the people who own it, and it covers the things that actually cause disputes: what each founder is committing in time and money, what happens if one leaves early, how shares vest, who can sell to whom, and how deadlocks are resolved.
Writing this while everyone is optimistic takes a few hours. Writing it during a fallout is rarely possible at all.
What registrations are needed after incorporation?
Incorporation is the start, not the finish. Depending on your activity, you will typically need a permanent tax account number and a tax deduction account number, registration under indirect tax law once you cross the turnover threshold (or immediately, if you supply across state lines or online), a bank current account opened in the company’s name, professional tax and shops and establishment registration where applicable, and social security registrations once you cross the employee headcount thresholds.
Two further steps are often missed: filing the declaration confirming that subscribers have paid in their share capital, which must be done within a set window after incorporation, and holding the first board meeting to appoint an auditor. Missing either carries penalties and, in the case of the capital declaration, can affect the company’s standing.
What are the ongoing obligations once the company exists?
A private company must maintain proper books, hold board meetings at prescribed intervals, hold an annual general meeting, have its accounts audited regardless of size, and file annual financial statements and an annual return with the registry. Directors also file an annual confirmation of their own details.
None of this is difficult, but the penalties for late filing accrue daily and apply to the directors personally as well as to the company. Founders who treat compliance as an afterthought usually discover the cost at the worst possible moment, which is during due diligence for a funding round or a sale.
What changes if a foreign shareholder is involved?
Foreign investment brings a second layer of rules on top of company law: the activity must be one where foreign ownership is permitted, share valuations must meet prescribed norms, funds must arrive through banking channels, and the investment must be reported to the central bank within strict timelines.
These filings are time-bound and the penalties for delay are real. If any part of your cap table is non-resident, plan the reporting calendar before the money moves, not after.
Pre-incorporation checklist
| # | What to check | Why it matters |
| 1 | Structure chosen deliberately | Determines compliance load, tax treatment and investor readiness |
| 2 | Name cleared at registry and trade mark search done | Avoids rejection, delay and forced rebranding |
| 3 | Domain and handles secured | Keeps brand consistent across legal and commercial identity |
| 4 | Minimum shareholders and directors identified | Two of each required; roles carry different responsibilities |
| 5 | Resident director confirmed | Mandatory; commonly missed by overseas founders |
| 6 | Registered office proof and owner consent ready | Decides jurisdiction; statutory notices are served here |
| 7 | Digital signatures and director identification obtained | Required before any filing can be made |
| 8 | Authorised versus paid-up capital decided | Increasing authorised capital later costs time and fees |
| 9 | Shareholding split agreed, deadlock resolved | Prevents disputes that stall decision-making |
| 10 | Objects clause drafted to fit current and planned activity | Affects banking, licensing and future expansion |
| 11 | Articles reviewed for transfer and control clauses | Governs exits, new investors and board changes |
| 12 | Shareholders’ agreement in place | Covers vesting, exits and dispute resolution |
| 13 | Post-incorporation registrations mapped | Tax, indirect tax, labour and social security |
| 14 | Auditor appointed and capital declaration filed on time | Statutory deadlines with penalties for delay |
| 15 | Foreign investment reporting planned in advance | Time-bound filings with strict consequences |
How SRC Chartered Accountants can support you
At SRC Chartered Accountants, we work with founders from the first structuring conversation through to the company’s first audited set of accounts.
We help you choose the right entity for where the business is going rather than where it is today, clear and reserve a name that will survive both registry scrutiny and trade mark risk, and prepare the incorporation file end to end, including digital signatures, director identification, constitutional documents and registry filings.
Beyond incorporation, we advise on capital structure and shareholding splits, draft and review shareholders’ agreements alongside your legal counsel, set up the tax, indirect tax and labour registrations your activity requires, and put a compliance calendar in place so that board meetings, audits and annual filings are handled before they become penalties. Where foreign shareholders are involved, we manage the valuation and reporting requirements within their timelines.
The objective is straightforward: a company that is correctly formed, cleanly documented and ready for whatever comes next, whether that is a bank facility, an investor or an exit.
To discuss your incorporation, get in touch with the team at SRC Chartered Accountants.