Convert Sole Proprietorship to Private Limited Company in India
A Proprietorship Company, famously known as a Sole Proprietorship company, is a type of business that a single person owns. Here, there is no legal distinction between the owner of the business and the business. The owner is in direct control of all aspects related to the business, is accountable for its functioning, and wholly owns its profits or losses.
A private limited company, famously known as LTD, is a privately held company. In a Private Limited Company, the business limits owner liability to its shares and limits the number of shareholders to 50. It also restricts shareholders from trading shares publicly.
Advantages of converting to a Private Limited Company
Liability limited to shares
Financial risks are a part of the business but to be able to minimize them and sustain the business progress is imperative. For example, in an LTD, if the company were to be closed for any reason, the shareholders would not risk losing their personal assets.
No Takeover risks
The risk of takeovers is minimized when two shareholders trade shares, as the selling and buying of shares, are possible only when both parties have given their consent.
Perpetual Existence
Private limited companies are incorporated. Hence it continues to exist even if the owner dies.
Raising Capital
The capital or options of raising business investment is not restricted to one person, which is the case in a Sole Proprietorship.
Tax Exemptions
Private limited companies pay corporate tax on their profits. However, dividends that the shareholders receive are not taxed. Instead, taxes are determined as per their income tax rate.
Large Enterprise
Sole proprietorship has difficulty reaching large-scale business standards, which is not the case in LTD. However, private limited companies can attract high-caliber employees that greatly help the company's growth.
Ease of Management
The burden of the operations and running of the business falls on one person in a Sole Proprietorship. Whereas, in LTD, the company is much easier to manage.
Eligibility criteria to convert a Sole Proprietorship to a Private Limited Company in India
Before you convert your Sole Proprietorship into a Private Limited Company, you must ensure to fit the following criteria:
Documents required for converting a Sole Proprietorship to a Private Limited Company in India
How to convert a Sole proprietorship to a Pvt Ltd company?
While filing an application for proprietor conversion to a Private Limited Company, the following documents must be attached with it:
Process for converting Sole Proprietorship to Private Limited Company in India
Procedure for conversion of a Sole Proprietorship into a Private Limited Company
The process to convert a Sole proprietorship to a Pvt Ltd company is as follows:
Our Assistance in converting your Sole Proprietorship to a Private Limited Company
We at Registrationwala provide end-to-end solutions for conversion from a Sole Proprietorship to a Private Limited Company. Our services include:
Registrationwala.com is a leading legal consultancy firm providing comprehensive services relating to Sole Proprietorship to Private Limited Company conversion.
So, take your first steps towards this conversion and reach out to us.
Q1. What is a Sole Proprietorship?
A. A Proprietorship Company, famously known as a Sole Proprietorship company, is a type of business that a single person owns.
Q2. What are the features of a Sole Proprietorship?
A. In a sole proprietorship, there is no legal distinction between the owner of the business and the business. Therefore, the owner is in direct control of all aspects related to the business, is accountable for its functioning, and wholly owns its profits or losses.
Q3. What do you understand by a Private Limited Company?
A. A private limited company, famously known as LTD, is a privately held company. In a Private Limited Company, the business limits owner liability to its shares and limits the number of shareholders to 50. It also restricts shareholders from trading shares publicly.
Q4. What are the advantages of converting to a Private Limited Company?
A5. Advantages of converting to a Private Limited Company are:
Q6. Can I convert Sole Proprietorship to a Private Limited Company?
A. Yes. You can connect with the Registrationwala.
Q7. What pre-conditions must be observed by a proprietor looking to convert to a Private limited company?
A. Before you convert your Sole Proprietorship into a Private Limited Company, you must ensure to fit the following criteria:
Q8. What documents are required for converting a Sole Proprietorship to a Private Limited Company?
A. How to convert a Sole proprietorship to a Pvt Ltd company? While filing an application for proprietor conversion to a Private Limited Company, the following documents must be attached with it:
Q9. How to convert Sole Proprietorship into a Private Limited Company?
A. The process to convert a Sole proprietorship to a Pvt Ltd company is as follows:
Q10. How can Registrationwala help you in changing your Sole Proprietorship to a Private Limited Company?
A. We at Registrationwala provide end-to-end solutions for conversion from a Sole Proprietorship to a Private Limited Company. Our services include: