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Convert Sole Proprietorship To Private Limited Company Process

Step 1
Calculate your assets
Step 2
Get the assets
Step 3
File conversion application
Step 4
Get approval
Step 5
Conversion complete

Convert Sole Proprietorship to Private Limited Company in India

A proprietorship company or famously known as sole proprietorship company is a type of business that is owned by a single person. 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 completely owns its profits or losses.

private limited company or famously known as LTD is a privately held company. This implies that the business limits owner liability to its shares and limits number of shareholders to 50. It also restricts shareholders from trading shares publicly.

Advantages of Private Limited Company

  • The liability of shareholders is limited to their shares. Financial risks are a part of business but to be able to minimize them and sustain the business progress is imperative. In an LTD, if due to any reason the company were to be closed the shareholders would not risk losing their personal assets.
  • Risk of takeovers is minimized when two shareholders trade shares as the selling and buying of shares is possible only when both parties have given their consent.
  • Private limited companies are incorporated; hence it continues to exist even if the owner dies.
  • The capital or options of raising investment in business is not restricted to one person, which is the case in sole proprietorship.
  • Private limited companies pay corporate tax on their profits. Dividends that the shareholders receive are not taxed. Taxes are determined as per their personal income tax rate.
  • Sole proprietorship has difficulty in reaching large-scale business standards whereas it is not the case in LTD. Private limited companies can attract high-calibre employees that offer great help in the growth of the company.
  • The burden of the operations and running of the business falls on one person in sole proprietorship. Whereas, in LTD, the business is much easier to manage.

Eligibility Criteria to covert a Sole Proprietorship to Private Limited Company in India

Before you’re allowed to convert sole proprietorship into a private limited company, you must fit the following criteria

·         A Private Limited Company can’t be headed alone. Thus, you’d need to appoint another director

·         You will need at least two shareholders

·         You should have the consent of everyone you once held debt to as a sole proprietorship.

·         You must have up to date financial documents pertaining to your sole proprietorship.

Documents Required for converting a Sole Proprietorship to Private Limited Company in India

  • A written agreement between the sole proprietorship and private limited company must be formed and sent to Registrar of Companies
  • Digital Signature Certificate (DSC) of all directors
  • Director Identification Number (DIN) of all directors
  • Altered Memorandum and Articles of Association (MOA/AOA)
  • Form 32 – This form is to be filed whenever there is a change or update in board of directors
  • Form 18 – This contains the notice of situation of the registered office of the proposed company
  • Form 1 – This to be filed to validate name availability of the newly formed company
  • Letter of authority or Power of Attorney (POA)

Process for converting Sole Proprietorship to Private Limited Company in India

The process to convert a Sole proprietorship to Private limited company is as follows:

·         Complete your slump sale formalities as a sole proprietor.

·         Appoint another director to head your upcoming private limited company.

·         Appoint the DIN and DSC for the said director and yourself

·         File the application to reserve the name of your private limited company using the RUN form.

·         Draft Memorandum of Association to specify the object of your company and Articles of Association to specify the code of conduct your company promises to live by.

·         File the application for company incorporation.

·         Obtain the Certificate of Incorporation.

·         Get the PAN and TAN of your newly formed private limited company.

·         Make modifications to your bank details as per your new business entity.

Our Assistance to convert your Sole Proprietorship to Private Limited Company

We, at Registrationwala provide end to end solutions for conversion from sole proprietorship to private limited company. Our services include:

·         DIN, DSC & Name Approval

·         Submission of Form

·         Reviewing the application and making changes if needed

·         Obtaining Certificate of Incorporation

·         Assisting you in obtaining PAN and TAN,

·         Further assistance with maintaining your books

Registrationwala.com is a leading legal consultancy firm providing the comprehensive services relating to sole proprietorship to private limited company conversion.

So, take your first steps towards this conversion and reach out to us.

 

 

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