Converting a proprietorship to a limited liability partnership (LLP) is a fantastic option for anyone looking to expand their small or medium-sized business. A single proprietorship cannot be turned into an LLP since it has only one owner. It can be done in one of two ways: by shutting the proprietorship and forming an LLP, or bringing in a new partner and converting the business to an LLP.
Documents for Registered Office Address
If Rented Property
Any one Document Require from Below
Before the conversion, all of the firm's assets and liabilities immediately become the LLP's assets and liabilities.
All of the firm's moveable and immovable assets are automatically transferred to the LLP. There is no requirement to execute a transfer instrument, and hence no stamp duty must be paid.
There has been no capital gains tax on the transfer of property from the firm to the LLP.
The successor LLP's loss/depreciation for the preceding year in which the conversion was conducted is the cumulative loss and unabsorbed depreciation of the predecessor LLP. As a result, the successor LLP can carry the loss for an additional eight years.
In the viewpoint of the law, an LLP benefits from Separate Legal Identity, which establishes that the business' assets and liabilities are not the Partners' assets and liabilities.
The cost of forming an LLP is significantly less than that of creating a public limited company or a private limited company. Through TaxDraw, you can register an LLP.
A limited liability partnership (LLP) requires a minimum of 2 partners, but there is no limit to the number of partners.
The LLP Act of 2008 places no restrictions on who can be a Partner in terms of citizenship or residency. Foreign nationals, including foreign companies and LLPs, are permitted to form LLPs in India if at least one of the Designated Partners is an Indian citizen. However, the person must be at least 18 years old, and can enter into a contract. In addition, the proposed Designated Partner must have a DIN number.
Once the LLP is formed, a clause allowing the LLP to take over the sole proprietor's business must be included.
A Limited Liability Partnership (LLP) can be formed with any amount of capital from its partners. Contributions can be concrete or intangible and might be in the form of money or something else.
Through books entry only, the takeover will result in the transfer of the trademark registered in the name of the Proprietorship.
Because making a profit is a requirement of an LLP, it cannot be formed to engage in non-profit activities.