How to start a company in India with almost no money

Udyam and the Udyam Assist Platform together hold 9,47,25,773 enterprise registrations, and 9,40,94,235 of those are micro. That is 99.3 percent of registered enterprises in India sitting in the smallest bracket (Udyam Registration portal, Ministry of MSME, counters dated 5 September 2026). Registration is not the thing that separates a business from a hobby. It is free and almost everybody has it.

The question students ask me is how much money it takes to start a company in India. The answer splits in two. The registrations people worry about cost nothing, and the government portals say so in their own words. The money goes somewhere else: a signature certificate, state stamp duty, whoever files the forms, and then a compliance bill that arrives every year whether you earned anything or not.

Every figure below was checked on 5 September 2026 against the government portal that owns it, and I name the portal each time. Fees and thresholds move by notification and the pages describing them are not always updated in step, so read this as a map of where to look. Where I could not verify a number on the day, I say that rather than print a plausible one.

# What starting costs, split two ways.
#
#   Free, and you file it yourself
#     Udyam (MSME) registration
#     DPIIT startup recognition
#     GST registration on the portal
#
#   Has a bill attached
#     Digital signature certificate
#     Stamp duty, set by your state
#     The professional who files the forms
#     Annual filings, audit, returns
#     2 to 3 percent to collect payments
#     online
#
# The first list is a morning of typing. The
# second one repeats every year.

Two of the registrations you want cost nothing

Udyam registration is the MSME one, and the portal is blunt about the price. "Registration Process is totally free. No Costs or Fees are to be paid to anyone." The paperwork is just as light. "No documents or proof are required to be uploaded for registering an MSME," and "Only Adhaar Number will be enough for registration." Your investment and turnover figures are pulled from PAN and GST linked government databases instead of being uploaded by you (Udyam Registration portal, Ministry of MSME, checked 5 September 2026).

The same portal runs a warning across the top: "Beware of Fake Sites." That is the failure mode for everything on the free list. The registration costs nothing, so anything you pay is a charge for someone else's typing, and the sites collecting it rank well for the search you are about to run. The one that is not a fake site is https://udyamregistration.gov.in, and it is worth typing rather than searching.

One registration per enterprise, and the brackets changed on 1 April 2025. A micro enterprise is now one where investment does not exceed ₹2.5 crore and turnover does not exceed ₹10 crore, up from ₹1 crore and ₹5 crore. Nobody reading this is at risk of leaving that bracket in year one. Micro reads like a judgement on size. It is a bracket holding 9.4 crore of the 9.47 crore registrations.

A proprietorship is a business to everyone except the registrar

The cheapest structure is the one you already have. A sole proprietorship is not incorporated and there is nothing to file at the Registrar of Companies. You trade under your own PAN, open a current account in the business name, take the free Udyam registration, and add GST when your case requires it.

There is a small piece of evidence for how the system treats proprietors, and it sits on the National Single Window System, the portal that now carries central approvals. "PAN verification is now mandatory for applying for any approvals on the NSWS platform," and the DigiLocker route for that verification is "Currently available only for 'Sole Proprietors'" (NSWS, checked 5 September 2026). Everyone else verifies with a digital signature certificate, which is the first item on the list you have to buy.

What a proprietorship does not get is the part to read before choosing it. No limited liability, so a business debt is your debt. No shares, so nobody can hold equity. And no DPIIT startup recognition, because the eligible entity list is a private limited company, a registered partnership firm, an LLP or a cooperative society (Startup India, DPIIT recognition page). Those three gaps are the reasons to incorporate. Looking serious is not one of them.

What has a bill attached, in the order it arrives

Incorporating a private limited company or an LLP puts four lines in front of you. A digital signature certificate for each director or partner. The filing fees on the incorporation forms. Stamp duty on the incorporation documents, which is a state charge and the line that moves most between one state and the next. And the fee of whoever prepares and files the whole set.

Ask for that quote itemised into three lines: government fee, stamp duty, professional fee. A bundled number hides which part is negotiable, and only the third one is. I am not printing a total here, because MCA's fee pages would not load for me on 5 September 2026, and a number I cannot check is worth nothing to you.

The line that decides the structure is the one after incorporation. A company files every year whether or not it traded: annual return, financial statements, an auditor, director KYC, income tax return, plus GST returns on their own schedule once you are registered. A proprietorship that earned nothing files one income tax return. That gap is the recurring price of the words Private Limited, and across three years it is larger than the incorporation itself.

DPIIT recognition is free, and the agent offering to get it is the tell

Startup India puts the price in a disclaimer rather than a headline. The ministry "does not charge any fee for DPIIT 'Certificate of Recognition' or 'Certificate of Eligibility' for startups." It "has not appointed any Agency/Representative/Franchise" for them either. Applications "should be filed by the startup on its own, using own details/mobile no./email" (Startup India, DPIIT recognition page, https://www.startupindia.gov.in, checked 5 September 2026).

The criteria are short enough to check in a minute. Not more than 10 years since incorporation, or 20 for a deeptech startup. Turnover under ₹200 crore in any financial year since incorporation, raised from ₹100 crore by DPIIT Gazette Notification 108(E) dated 4 February 2026. An entity "formed by splitting up or reconstruction of an existing business" is excluded. And the entity has to be working on innovation or improvement of a product, process or service, or carry a scalable model.

Applications route through the National Single Window System at https://www.nsws.gov.in rather than the Startup India site itself. On the NSWS dashboard you add Central Approvals, then add the application named Registration as a Startup.

What recognition is worth once you have it

The tax exemption is the headline and the one to read slowly. Section 80-IAC gives a recognised startup exemption from income tax for "3 consecutive financial years out of their first ten years since incorporation." Only a private limited company or an LLP qualifies, and it must have been incorporated after 1 April 2016. Three years out of ten means you pick the years. A tax holiday in a year with no profit is worth zero, and that describes most first years, so the value of recognition lands later than the certificate does.

The rest is compliance relief, which is what a small team feels first. Recognised startups "self-certify compliance with 6 labour laws and 3 environmental laws through a simple online procedure." On the labour side, "no inspections will be conducted for a period of 5 years." The exception is a "credible and verifiable complaint of violation," and even that has to be approved a level above the inspecting officer.

On intellectual property, applications are fast-tracked and startups get an "80% rebate in filing of patents vis-a-vis other companies." The facilitator's bill goes too: "the Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs." On government tenders, recognised startups are "exempted from submitting Earnest Money Deposit (EMD) or bid security," and manufacturing startups skip the prior turnover and experience criteria on GeM.

One listed benefit reads better as a cost line. A startup with a simple debt structure "can be wound up within 90 days" of an insolvency application under the Insolvency and Bankruptcy Code, with creditors paid within six months of the insolvency professional's appointment. The exit is cheap and quick, and that is the paragraph nobody reads before starting.

GST is where the free plan ends

You register for GST yourself on the government portal. What costs you is everything after that: returns on a fixed schedule, monthly or quarterly, in every period including the ones where you invoiced nobody, and a late fee on each return you miss. For most solo businesses this is the first recurring bill of the lot, and it is easy to take on before you have to.

On the threshold, be careful about what you read, official pages included. CBIC still publishes a FAQ at https://cbic-gst.gov.in saying a person "is liable to register if the aggregate turnover (all India) is more than 20 lacs (Rs. 10 lacs in Special Category States)." The same page says a composition dealer "becomes ineligible for composition scheme on the day the turnover crosses Rs. 75 lakhs." It carries no publication date, and both numbers describe the position at the start of GST in 2017. Take the threshold for your supply type and your state from the notification in force or from a CA, not from an undated FAQ and not from this post.

One rule on that page has not moved, and it matters if you are thinking about registering early to look established. Register voluntarily below the threshold and you are "treated as a normal taxable person," which means tax on your first supply and returns from your first month. Registering before a client or the law requires it buys you an obligation and a filing calendar.

Collecting the money takes a percentage

The cost you cannot design away is the fee on the way in. Razorpay's published rates on 5 September 2026: 2 percent per successful transaction on all domestic instruments, plus 18 percent GST on that fee, and 2.15 percent on corporate cards. International cards run up to 3 percent. Inward bank transfers through a virtual multi currency account are 1 percent on the standard plan, with the FIRC generated automatically. Setup fee, annual maintenance and refund fees are listed at zero, and above ₹5,00,000 a month the rate is negotiated.

Run it on one invoice. ₹1,00,000 collected through a domestic gateway is ₹2,000 plus ₹360 of GST on the fee. The same amount on an international card at 3 percent is ₹3,000 plus ₹540. Through the multi currency account at 1 percent it is ₹1,000. Paid into your bank against an invoice, it is nothing.

So the gateway has a place and it is a narrow one. Selling a product to strangers who will never do a bank transfer: use one. Billing four clients a month for project work: send an invoice, take the transfer, keep the 2 percent. Our own studio invoicing runs in INR against a written proposal, and the gateway percentage never enters a project price.

The documents worth more than the registration

The paperwork that changed how clients treated my work was not filed with any government. When I started taking client work seriously in 2024, I set up four documents: fixed-price engagements, written proposals, NDAs and full IP handover on delivery. Those four cost nothing to write, and they answer what a client is asking when they ask whether you are a company.

Put your Udyam number on the invoice while you are there. MSME Samadhaan is the delayed payment route run by the Ministry of MSME, and it is open to registered micro and small enterprises. So the free registration you did in a morning is also the paperwork behind being paid late rather than never.

The arithmetic here is one sided. Our web app engagements start at ₹1,50,000. One scope argument on one project that size, settled badly because nothing was written down, costs more than every registration in this post put together. The long version of how I quote a job is at https://amitkumarraikwar.dev/blog/the-quote-is-the-hard-part, and it is a better use of your first afternoon than choosing a company name.

Money the government will lend before it grants

Credit for small enterprises exists and the Udyam number is the key to most of it. The credit guarantee limit for micro and small enterprises was raised "from existing Rs. 5 crore to Rs. 10 crore" (DC-MSME notices, checked 5 September 2026), which matters to a manufacturer buying machines and rarely to someone writing software. For a software business the starting capital is a laptop, a domain and the hours, and a term loan against that is a liability rather than a resource.

The order I would use

Doing this again on the smallest possible budget, the sequence would look like this, and the first line is the one that decides the rest.

# The cheapest legal path, in order.
#
#   1  Get one client to pay you for work,
#      as a proprietor, under your own PAN
#   2  Udyam registration, free, one morning
#   3  A proposal, an NDA and an invoice
#      template you reuse
#   4  Current account in the business name
#   5  GST when the threshold or a client
#      requires it, not before
#   6  Incorporate when liability, equity or
#      a client's vendor process demands it
#   7  DPIIT recognition, free, after step 6
#   8  Trademark once the name earns money
#
# Steps 1 to 4 take about a week and the only
# bill is the bank's.

Everything up to step 4 is reversible and close to free. Everything from step 5 adds a filing calendar you cannot pause. Running the list in reverse is the common mistake: an incorporated company with a logo, a compliance bill and no invoices, which is the most expensive way to stay undecided.

A certificate says the business exists. An invoice is the only document that proves it.

If the missing piece is the client rather than the company, that is the harder problem and it is worth solving first. I listed the routes I have used at https://amitkumarraikwar.dev/blog/five-ways-to-earn-money-full-stack-developer-2026, and the terms my studio works on, fixed price and full IP handover, are written out at https://amitkumarraikwar.dev/studio.