to LLP (Limited Liability Partnership)
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How to start Proprietorship to LLP
Limited Liability Partnership (LLP) in India was introduced through the LLP Act, 2008. The basic concept behind adopting LLP was to provide a structure which is easy to maintain and minimizes liability as compared to sole proprietorship structure. LLP combines the benefits of both the company and the partnership firm into a single form of organization and provides a hybrid structure. Hence, converting sole proprietorship into LLP is a good business decision.
Reasons Why You Should Convert Proprietorship to LLP
Separate Legal Existence.
A limited liability partnership is a separate legal entity, and its existence is separate from that of its partners, unlike a general partnership firm. This makes it possible to own the property and enter into a contract in the name of the LLP or sue a third party in case of any dispute.
Limited Liability of Owners
The liability of the partners is limited to the extent of capital contribution agreed by the partners in the LLP agreement. The loss or debt of the LLP cannot be assigned to the partners even during the dissolution of the LLP. In addition, one partner is not held responsible for the acts of negligence or misconduct of another partner.
Flexibility to Operate
The LLP is managed and operated as per the LLP Agreement. It is the partners who decide how the LLP will function and divide the duties and responsibilities. Hence, it is a very flexible structure and the participants are free to make their own rules of management which is not possible in other business structures.
Lower Compliance Requirement
Compared to a private company, LLP has less compliance requirements, including audit requirements. The need for statutory audit arises when a certain level of turnover or contribution is reached. Further provisions like meeting of partners, operation through resolutions have been relaxed and are not mandatory in every case.
There are many more reasons to choose an Proprietorship to LLP
Eligibility Criteria for Conversion of Proprietorship to Limited Liability Partnership in India
Two or more persons should come forward for partnership and at least one of them should be a resident Indian citizen.
The registered place of business/office should be located in India.
Documents Required for Conversion Into Proprietorship to Limited Liability Partnership.
- Pan Card
- Partner’s Address Proof
- Business Address Proof
- Noc From Owner
- Rent agreement
- NRI/ Foreign National
Pan Card of all partners Foreign nationals may provide passport Partners Address proof.
Aadhar Card/ Voter ID/ Passport/ Driving License of all partners.
Latest Passport size photographs of all partners.
Electricity Bill/ Telephone Bill of the registered office address.
No Objection certificate to be obtained from the owner of registered office .
Rent Agreement of the registered office Should be provided, if any.
In case of NRI or Foreign National, documents of partners must be notarized or apostilled.
*Please note that in case of foreign nationals as partners or NRIs, all the above documents should either be notarized or produced.
Procedure for Conversion of Proprietorship to Llp With Legaltax
- Fill the form – The most important step requires you to fill some questionnaires and submit the required documents with consultation from our experts.
- Application for DSC and DPIN - The next step is to apply for Digital Signature Certificate and DPIN for all the participants.
- Application for Reservation of Name - The next essential step is to search for a suitable name, check whether it is available or not and apply for the name
- Drafting and Filing of Incorporation Document – After carefully drafting the incorporation document, we will file for conversion of Sole Proprietorship to LLP. After this you will receive the Certificate of Incorporation.
- Application for PAN and TAN - After the receipt of certificate of incorporation, the next step is to apply for PAN and TAN for LLP.
- Drafting and Filing of LLP Agreement – The final step for conversion is putting the terms and clauses of operation and ownership in the draft LLP agreement and filing it with the Ministry of Corporate Affairs.
With our help this whole process can take up to 21 working days.