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PROPRIETORSHIP FIRM INTO LLP

OVERVIEW

LLP is a limited liabilities partnership firm, which is form and acts as a body corporate further but in the taxation aspect, it is similar to a general partnership.

An LLP is a recognizable business form similar to a corporate body, which inclusive of all provision of a traditional partnership firm with the advantages of a Separate Legal entity. As it contains the features, legal provision of both Company and Partnership, we can say it the HYBRID Entity.

LLP is governed by the Limited Liability Partnership Act, 2008 which came into force on 01/04/2008. This Act was introduced with the idea of promoting the SMEs MSME Sector (Micro Small Medium Enterprises) to govern their business of corporate style with the advantages of self-governance and less compliance.

Following are the benefit of LLP

1 The important advantage of an LLP is that LLP is easier to start and manage and the process has lower formalities.
2 It has a low cost of registration as compared to a Company.
3, LLP is a separate body.
4, LLP has no minimum requirement for capital.
5, The partners would have limited liability to their agreed contribution in the LLP.
6, No requirement of compulsory Audit.
7, Annual compliance is lesser than companies.

  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition 
  • Minimum Requirement to Start A LLPMembers: Two people are needed to register the LLP. However, there is no limit on maximum partners.
    No Minimum Capital: required of Capital, in the case of LLP is depending on the need of the business and contribution of a partner in a partnership. The Stamp Duty is based on the amount of capital.
    Person requirement: One Designated partner of LLP must be from a resident in India.
    Name: The name of the LLP should be different from the other company and it must not be the same or similar to the name of any other company, LLP, or trademark which is registered or applied for.

All about Limited liability partnership

OVERVIEW

LLP is a limited liabilities partnership firm, which is form and acts as a body corporate further but in the taxation aspect, it is similar to a general partnership.

An LLP is a recognizable business form similar to a corporate body, which inclusive of all provision of a traditional partnership firm with the advantages of a Separate Legal entity. As it contains the features, legal provision of both Company and Partnership, we can say it the HYBRID Entity.

LLP is governed by the Limited Liability Partnership Act, 2008 which came into force on 01/04/2008. This Act was introduced with the idea of promoting the SMEs MSME Sector (Micro Small Medium Enterprises) to govern their business of corporate style with the advantages of self-governance and less compliance.

 

Following are the benefit of LLP

1 The important advantage of an LLP is that LLP is easier to start and manage and the process has lower formalities.
2 It has a low cost of registration as compared to a Company.
3, LLP is a separate body.
4, LLP has no minimum requirement for capital.
5, The partners would have limited liability to their agreed contribution in the LLP.
6, No requirement of compulsory Audit.
7, Annual compliance is lesser than companies.

 

Following are the disadvantage of LLP

  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition 

 

  • Minimum Requirement to Start A LLP

Members: Two people are needed to register the LLP. However, there is no limit on maximum partners.
No Minimum Capital: required of Capital, in the case of LLP is depending on the need of the business and contribution of a partner in a partnership. The Stamp Duty is based on the amount of capital.
Person requirement: One Designated partner of LLP must be from a resident in India.
Name: The name of the LLP should be different from the other company and it must not be the same or similar to the name of any other company, LLP, or trademark which is registered or applied for.

 

 

 

Proprietor into LLP

Limited liability partnership  Act 2008 comes into force in India, 2008. The idea behind adopting LLP ACT was to provide a corporate structure that is easy to maintain and reduces liability as compared to a sole proprietorship structure. LLP consolidates the benefits of both the Company and Partnership firm into a single form of organization and offers a hybrid structure. Hence, the change of sole ownership into LLP is a decent business choice. The best part of LLP provides limited liability protection to owners from the debts or uncertain liabilities of the LLP. Accordingly, LLP is favored for the most part by Professionals, Micro, and Small organizations that are family-possessed or intently held.

Benefits of conversion from proprietorship to LLP

Separate Legal Existence

A limited liability partnership is a separate legal entity, and its existence is separate from its partners, unlike the general partnership firm. This makes it possible to own assets and enter into contracts in the name of the LLP or use a third-party/outsider in case of any dispute.

Limited Liability of Owners

The obligation of Partners is limited to the extent of capital contribution agreed by the partners in the LLP Agreement. The loss or debt of LLP cannot be allocated to partners even while the dissolution of LLP. Further, one partner is not held responsible/ answerable for the actions or negligence, or misconduct of any other partner

Flexibility to Operate

The LLP rules and regulation is LLP agreement.  The duties and responsibilities of business under LLP is decided by its partner duties and responsibilities. Hence, it is a very adaptable structure, and the partners allowed to make their own standards/rules of management which is not possible in other business structures

Lower Compliance Requirement

Compared to a Private Company, there is a lower compliance requirement in the case of LLP, including the audit requirement. The requirement of a statutory audit arises on reaching a certain level of turnover or contribution. Further, provisions such as the meeting of partners, operation through resolutions are relaxed and not mandatory in every case.

Documents required converting into LLP

PAN Card – Pan is a mandatory document. PAN Card of every partner of proposed LLP

Address Proof – Address proof of the partner’s LLP.  Address proof like Aadhar card or Voter ID or Passport or Driving License.

Photograph – Recent passport size photo of each partner.

Business Address Proof – Proof of registered office address like rent agreement with NOC and electricity bill not older than two months.

NRI/ Foreign National – If any of your partners is either an NRI or a foreign national, all the documents of the partner should be notarized.

Basic

INR 1,500/-

One Time Fee

  • GST Registration
  • MSME Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 11,999/-

One Time Fee

  • GST Registration
  • Shop & Establishment Registration
  • MSME Registration
  • Trade Mark Registration
  • Logo Design
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

  • Yearly GST Compliances
  • Income Tax Return

Services Provided Before the Due Date

Frequently Asked Questions

To continue the business of sole Proprietorship Firm as an LLP (Limited Liability Partnership), the procedure of Takeover of the said firm by LLP shall be followed

The procedure of Incorporation of LLP as prescribed in LLP Act, 2008 shall be followed including the procedure to effect the takeover of Proprietorship Firm.

Once the LLP is incorporated, a clause of takeover of the business of Sole Proprietor shall be entered into the LLP Agreement.

The DSC (Digital Signature Certificate) and DIN (Director Identification Number) of all Partners is required along with a business place to carry on the Business.

normal LLP, minimum 2 Designated Partners shall be appointed being individual where at least one shall be resident in India.

A Limited Liability Partnership can be started with any amount of capital contributed by the Partners of the LLP. The form of contribution can be tangible as well as intangible and in form of cash or otherwise.

PAN card & Address proof of all the partners is required in addition to the registered office address proof. Further, the certificates of registration, if any were obtained in the name of Proprietorship shall be provided along with the latest financial statements and ITR.

The registrations in the name of Proprietorship Firm cannot be amended therefore fresh applications for the registration in the name of LLP shall be filed with concerned department. The registration in the name of Proprietorship, if not required for any other business then, it shall be surrendered.