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