What is a Proprietorship to Partnership Conversion?
For a company to grow and flourished, it needs assistance and support. At ccadvisors.in we provide online assistance for conversion of your sole proprietorship to a partnership firm. Our qualified team of legal professionals, chartered accountants and company secretaries are always available to assist you with all the legal and administrative aspects of the registration, conversion, and drafting of proprietorship to partnership deed and post registration aspects that are required to be fulfilled to convert proprietorship to partnership.
To change from a sole proprietorship to partnership you would be required to follow certain quick and easy steps and provide CCA with the required documents and we would convert your sole proprietorship to partnership firm. Subject matter experts are available on call or via email to answer your queries.
We also provide a full spectrum of post conversion services related to MSME, VAT registration and filing , Service Tax Return Filing, TDS Return Filing, Trademark registration, Trademark Objection, assignment & renewal, Copyright registration, Accounting & Bookkeeping, Legal Drafting, , Import Export Code Registration, etc. We offer services through an online model and a network of trusted affiliates across all major cities in India including Mumbai, Delhi, Ahmedabad, Pune, Bangalore, Hyderabad, Vadodara, Kolkata, Chennai, Noida, Gurgaon, Surat, Rajkot and others.
Benefits of Proprietorship to Partnership Conversion
Shared Liabilities
The term Partnership, itself describes two or more individuals coming together for fulfilling some common objective. The partnerships referred here are of pure business nature. Therefore, the partners share the responsibility to work and manage the business. Partners share rights and liabilities in the business, dividing the burden of responsibilities among them. Not just money but resources, knowledge and judgment are also pooled in for improving the business.
You do not need to start new business
With conversion, the accumulated loss and unabsorbed depreciation of Proprietorship is deemed adjusted as loss/ depreciation of the successor partnership firm. All the assets and liabilities of the firm immediately after the conversion are turned into the assets and liabilities of the partnership. All movable and immovable properties of the firm automatically vest in the partnership. Hence, the conversion is easy and hassle-free.
Partner net worth is Increased
There is a distribution of Post-Tax profits among the partners with no additional tax liability. No Capital Gains tax shall be charged on transfer of property from Proprietorship to Partnership firm. The reduction of tax liabilities indirectly increases the amount of money earned which results in an increase of net worth of all the partners.
No fixed capital investment required
The partners can internally decide on their individual investment in the firm and then divide the stakes accordingly, which gives them the flexibility to make decisions in the business. Uneven capital contribution between partners is permissible. There is no predefined limit on partners’ capital contribution, allowing the partners for putting in preferable amounts as capital and make decisions about the withdrawals mutually.
Documents Required for Proprietorship to Partnership Conversion India
Business Proof
Electricity Bill/ Telephone Bill of the registered office address
ID Proof
Self- attested copy of Aadhar Card, Voter ID/ Passport/ Driving License of all partners.
A self-attested copy of PAN Card of all partners
Details about the sole Proprietors Business
If the proprietorship firm is licensed under GST or any other registrations obtained , forms need to be submitted to the concerned departments for change of status of the business
Statement of assets and liabilities
Updated statement of assets and liabilities certified by a CA.
How to Register a One Person Company Online with CCA?
1. Fill the form given on the right 2. Select your package 3. Fill the company details 4. Pay the amount & done Once you done, our expert will contact you.
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Frequently Asked Questions
1After Proprietorship to Partnership Registration, Is it mandatory to register Partnership?
It is not mandatory but highly recommended. If it is not registered, the firm cannot file a suit against any partner or third party. The partners also cannot sue the partnership firm for his/her claim. However, third parties can sue the firm to enforce their dues or claims. Due to non-registration, the rights of parties are not affected. Also, the partnership can be registered at any time after the formation to remove said effects.
2What is an advantages of registering a Proprietorship to Partnership Firm?
In a proprietorship firm, there is no legal distinction between you and the business; leaving you personally liable for any debts or obligations the business may incur. Also, there are no limitations and no protection for your personal assets. In case of partnership firm, it is divided amongst the partners.
3The application of Proprietorship Partnership Firm Registration is submitted under which Government Authority?
The application for Partnership Firm Registration in India is submitted with the Registrar of Firms (RoF) under whose jurisdiction the Place of Business of Partnership Firm falls. The application of Registration is made in required form along with submitting the Partnership Deed. At the end of the registration procedure, the Certificate of Registration is issued by respective RoF. The process and time of registration may differ for each RoF.
4Can a new Partner be admitted to Proprietorship to Partnership Firm Conversion?
A partner can nominate a successor to take his/her place in the event of death or retirement of the partner. The mode of introducing a new partner or successor is based on provisions in the partnership deed. A new partnership deed is required once the new partner is admitted into the firm.
5What should be taken care of by the proprietorship firm during the process of business structure change?
In case of conversion, existing firm should cease to be a taxable person . There should not be any activity in converted proprietorship after transfer of stock into a new entity. In case, there are unutilized input tax credits lying at the time of such conversion, these credits are allowed to transfer into a new entity.
6Whether stamp duty is payable on conversion?
For confirming the validity of a partnership deed, the partners must pay stamp duty required as per the capital of the firm. The amount of stamp duty payable depends on the amount of capital contribution by partners. The rate of duty is prescribed under the State Stamp Act that differs for every State. Amount of ₹ 500 is included in our package.
7What is the next step after filing for change from the sole proprietor to partnership?
The partnership firm shall also have to apply for registration under other statutes such as GST, Shop and Establishments Act and the likes; depending on the nature of the business. In case the sole proprietorship firm owns a trademark, the change regarding the inclusion of partner needs to be added in the trademark registry.
8 Who can be partners after Proprietorship to Partnership Conversion?
A partner can nominate a successor to take his/her place in the event of death or retirement of the partner. The mode of introducing a new partner or successor is based on provisions in the partnership deed. A new partnership deed is required once the new partner is admitted into the firm.
9Whether the audit is required for Partnership Firm while conversion?
Partnership firms do not need to prepare audited statements for each year. However, depending on the turnover and a few other criteria, a tax audit statement might be necessary.
10Is a fresh GST registration required for the Proprietorship to Partnership Firm Conversion?
Yes, you will have to apply for a new GST registration and then surrender the one taken in the name of proprietorship firm. You can get the GST registration done with Legalwiz.in at an additional cost.