Convert Proprietorship toPrivate Limited Company
Converting a sole proprietorship into a private company requires first forming a sole proprietorship, gaining control of the sole proprietorship through a Memorandum of Agreement (MoA), and transferring all rights and obligations the limited company.A week ago
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INTRODUCTION
Conversion from Proprietorship to Private Limited Company
Initially, the sole proprietorship form was the most popular when starting a company because of the minimal compliance requirements. As the company expands, action should be taken to limit liability to one person and reduce the workload associated with compliance. Here, switching from a sole proprietorship to a privately held company is a smart move. To convert from a sole proprietorship to a sole proprietorship, the promoters must enter into an agreement to sell the business Additionally, they must identify a common objective for the transition from a sole proprietorship to a sole proprietorship in the business is expressly referred to in the memorandum as “the purchase.” which belongs to one.”
ADVANTAGES
Advantages of conversion from Sole Proprietorship to Private Limited Company
Separate Legal Existence
A private limited company exists without its members and is a separate legal entity. This allows the company to hold assets, enter into contracts in the name of a private company, and sue third parties in the event of a disagreement without Members (shareholders/directors) beyond the ownership of the company being personally responsible for its' . obligations of the creditors agency.
Limited Liability of Owners
If the firm has any outstanding obligations, the directors' personal assets in a private limited company are unaffected. The only funds that may be used to settle dues are those used to fund the company's establishment or its assets.
Easy Transferability
With the approval of shareholders, the ownership of the firm can be changed from one person to a corporation by transferring the shares. In contrast to proprietorships, where such transfers are prohibited, this one is more simpler.
Uninterrupted existence
A private limited business has an endless succession since it is a distinct legal entity. It is not impacted by the passing away or other departure of any members, in contrast to a single proprietorship. It does not cease to exist despite shifts in its membership.
A LIST OF DOCUMENTS
Documents required for conversion to a Private Company
PAN Card
Directors' and shareholders' PAN cards Passports may be provided by foreign nationals.
Partner’s Address Proof
Each director and shareholder must have an Aadhar card, a voter ID, a passport, or a driver's license.
Photograph
the most recent passport-size photos of each director and shareholder
Business Address Proof
Bills for telephone and electricity at the registered office address
NOC from owner
A certificate of no objection must be acquired from the registered office's owner.
Rent Agreement
Rent Agreement of the registered office should be provided, if any
Income Tax Returns Acknowledgement
An acknowledgment of income tax return must be filed by the lone proprietor.
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Convert Proprietorship Firm into private ltd. company in 3 Easy Steps
1. Respond to Quick Questions
- Our questionnaires take less than ten minutes to complete.
- Give the essential information and paperwork needed to convert a proprietorship to a partnership.
- Pay using a safe and secure payment gateway.
2. Experts are Here to Help
- Dedicated Relationship Manager
- Procurement of Digital Signatures (DSC)
- Application for Name Reservation
- Drafting Documents including MOA and AOA
- Certificate of Incorporation
3. Your Private Limited Company is Registered
- All it takes is 12-15 working days*
The process of converting a proprietorship to a limited company.
Day 1
- Application for Digital Signature Certificate
Day 2 - 4
- Checking Name availability
- Application for Name Reservation under “RUN”
- Reservation of Name
Day 5 - 8
- Drafting of MoA, AoA & other documents
- Payment of Stamp Duty
- Notarisation of required documents
Day 9 - 10
- Filing application for company registration
- Application for DIN Allotment
- Application for PAN and TAN of company
Day 11 - 15
- Government processing time
Explore conversion of sole proprietorship to Private Company in India
Frequently Asked Questions
Two or more people would be required to serve as the company’s directors in a Pvt. Ltd. It’s standard procedure for the company’s stockholders to function as directors. There is no minimum required for the amount of capital to be pumped. To register a corporation, you must pay the government a specified amount in order to issue shares worth at least ₹1 lakh, which is known as Authorized Share Capital. Furthermore, proving the amount of money invested during the registration process is not necessary.
It is beneficial to launch a company under the Pvt. Ltd form since it establishes credibility and confidence. It facilitates loan acquisition and draws in additional financial institutions, vendors, and customers. Private limited corporations, as opposed to other business structures like sole proprietorships or general partnerships, offer a reliability factor that investors and financial institutions value. Thus, it’s a great choice if you’re wanting to grow your business or if credibility is vital to you.
It is beneficial to launch a company under the Pvt. Ltd form since it establishes credibility and confidence. It facilitates loan acquisition and draws in additional financial institutions, vendors, and customers. Private limited corporations, as opposed to other business structures like sole proprietorships or general partnerships, offer a reliability factor that investors and financial institutions value. Thus, it’s a great choice if you’re wanting to grow your business or if credibility is vital to you.
As long as the annual compliance requirements are consistently fulfilled, a company that has been incorporated will remain active and operational. If the yearly compliance requirements are not met, the business will go into dormancy and may eventually be removed from the register. A company that has been struck off may be resurrected for a maximum of 20 years.
A board meeting must be held by the corporation at least once every three months. An Annual General Meeting (AGM) must be held annually, in addition to the Board Meetings. In order to keep the company active, the Annual Compliance Requirements must be fulfilled.
The Ministry has added a new form called “RUN” (Reserve Unique Name) for registering company names on its website. The applicant may submit an application under “RUN” by giving two distinct names and explaining their importance. The names must to be distinct and compliant with the guidelines.
- The newly established company is deemed to have acquired all of the sole proprietary concern’s business-related assets and liabilities. This means that any capital gains determined on such a transfer will be subject to taxation for the sole proprietor. Section 47(xiv) of the Income Tax Act, however, contains a clause that establishes requirements for exemption from capital gains. Specifically, if the assets are transferred right before the succession, they become the company’s assets and liabilities.Anybody can become a shareholder at any time, either during or after registration. Shares in a firm may also be held by an Association of Persons (AOP), such as a Trust, or a Body Corporate, such as a company or Limited Liability Partnership. Additionally, a group of people may collectively own the company’s shares.
- Anybody can become a shareholder at any time, either during or after registration. Shares in a firm may also be held by an Association of Persons (AOP), such as a Trust, or a Body Corporate, such as a company or Limited Liability Partnership. Additionally, a group of people may collectively own the company’s shares.
