Easy and seamless transition of your partnership firm to a private Limited company
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Registering a Convert your Partnership to Private Limited Company is quick, easy and can be done online with TAXOUTLOOK in 3 Simple Steps
Our experts provide you all the information needed
You share us all the relevant documents
Relax!!We will get the things done
Many businesses started with a partnership firm may wish to convert it into a Private Limited company. A private limited company offers much more flexibility in capital raising, reputation and ease of operation. Typically, as a business grows, the compliance filings and the corresponding costs of partnership firm may become more or less equal to a private limited company. Therefore, to suit the business requirements, conversion of partnership firms into Private Limited companies becomes a logical process.
A Partnership firm can be converted into a Private Limited company under section 366 of the Companies Act, 2013 and ‘Company (Authorized to Register) Rules, 2014’. Under this services, we use direct conversion of existing partnership firms to a private limited company method.
Benefits The advantages of conversion of a firm into a private limited company are as below. Capital Funding It becomes easier to raise capital funding under the private limited company as it offers flexibility. In case of firm, capital can be brought in by partners only. Whereas, in a private limited company, capital funding can be obtained from any person. The best choice of investors is a private Limited company. FDI A Private Limited company does not require FDI approval under the automatic route. Whereas a partnership firm requires approval from the Government. Again, Foreign Direct investment is an important criteria for growing business to manage its capital needs. Method There are two different methods to convert a Firm into a Private Limited company. 1. New Company Formation: Incorporate and new private limited company and takeover the existing firm business by a written business transfer agreement. However, Capital gains tax (Income tax) and Stamp duty is applicable for transfer of assets from firm to private limited company. 2. Conversion of Firm into Private Limited Company: In this method, the existing firm is converted into a private limited company. More on this method is elaborated in subsequent sections. A minimum of 7 partners is required to convert an existing firm into a Private Limited Company.
1. Consent from all the partners for conversion.
2. Advertisement in one local and national newspaper.
3. NOC from the Registrar of Firms, where such a Firm is registered.
4. NOC from all the secured creditors of the Firm.
5. Undertaking from the proposed Directors that they will comply with the requirements of Indian Stamp Act,1899 as applicable.
6. A copy of the latest income tax returns filed.
7. KYC documents of the Partners
Our compliance expert will be in touch with the documents. Once you share these documents, we will complete the filings of necessary forms with RoC.
1. Hold a meeting of partners to take assent of the majority of members summoned for the purpose of registering the Firm as Private Limited Company and apply for name approval.
2. Apply for DSC and DIN for the partners.
3. File form URC-1 with the below documents for Registration as Private Limited Company.
You don’t have to worry about the above process as our Compliance experts will help you in getting the company registration smoothly, quickly and hassle-free.
Compared to LLP, for future funding requirements and better credibility, Private limited Company is better. In case of LLP, only a partner can bring in Capital. In case of a company, a shareholder and director are different and hence, any number of shareholders can be accommodated, while the management lies with the promoters.
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