Conversion of a Sole Proprietorship to Private Limited Company
Convert your proprietorship to a Private Limited and enjoy the benefits of limited liability with a proper, trustworthy, credible business structure.

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Every business structure has its own benefits, and while a sole proprietorship is an easiest and most affordable set up to do business, it does keep its owner at risk. And when revenues go up, it’s most advisable to separate the entity from personal liability and form a private limited structure. Conversion of a Proprietorship to a Private Limited Company provides you credibility, and trustworthiness in the eyes of bank credit and investors. Our counsels help you transfer your assets, plan your structure and help in legal and financial transitions.

How is the conversion done?

  1. Getting Director’s Digital Signature and Director Identification Number (DIN)
  2. Incorporation Documents for Private Limited company
  3. NOC Certificates from Authorities
  4. Calculating finances, assets, licenses, registrations, liabilities and recoveries.
  5. Any other document or information as requested by the authorities
  6. Receiving new Certificate of Incorporation

Documents Required:

Proprietorship’s documents:

  1. GST number
  2. Bank Account statement and details related to all assets and liabilities
  3. Last audit report, if any, audited by Chartered Accountant (CA)

Directors’s Documents:

  1. Identity proofs (Aadhar/ Voter ID), 
  2. Passport size photographs
  3. PAN cards, DSC & DIN
  4. Details (Mobile number, Email Address)

Office Address:

  1. Utility Bill (Electricity/ Water Bill)

Other than the documents one would require at least 2 Directors, a unique name for the company, and a minimal Capital Contribution.. For foreign nationals, an apostilled or notarized copy of the passport has to be submitted mandatorily.

How different is Private Limited from Proprietorship?

Private Limited is a separate artificial entity and is governed under the companies act, 2013, and the shares are held privately not offered to the public. Similarly, the structure of taxation will be unique under income tax act, 1961, and different from the sole proprietorship, which considers the income as individual income.

Is the sole proprietor in any way, binded to the company?

The old sole proprietor will hold shares for a minimum period of 5 years from the date of incorporation of a new private limited company.

Are there any restrictions on the new equity structure?

After the conversion takes place, the old sole proprietorship will hold 50% of shares in a new private limited company. i.e 50% of the voting rights will be held by a sole proprietorship.

How does assets are transferred?

Our valuation experts help you assess the markets, and all the assets and liabilities of the old sole proprietorship are transferred to the company.

Are there any benefits on Taxation with Private Limited?

It attracts lower tax rates and subsidies under the Income Tax Act, 1961. The profit of the private limited company is subjected to the tax rate of 30% + surcharge & cess as applicable.

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