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PROPRIETORSHIP FIRM into LLP

Limited Liability Partnership

An LLP is a unique form of legally recognized business vehicle, which integrates flexibility of a traditional partnership firm with the advantages of Separate Legal entity. As it contains the features of both Company and Partnership, it is rightly been called the HYBRID Entity.

LLP is governed by Limited Liability Partnership Act, 2008 which came into force on 1st day of April 2008. This Act was introduced with the idea of promoting MSME Sector (Micro Small Medium Enterprises) with the advantages of self governance and less compliances.

  • Automatic Transfer
    All the assets and liabilities of the firm immediately before the conversion become the assets and liabilities of the LLP.
  • No Stamp Duty
    All movable and immovable properties of the firm automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
  • No Capital Gain Tax
    No Capital Gains tax shall be charged on transfer of property from Proprietorship firm to LLP.
  • Continuation of Brand Value
    The goodwill of the Proprietorship firm and its brand value is kept intact and continues to enjoy the previous success story with a better legal recognition.
  1. Not able to raise venture capital funding
  2. Rights of partners
  3. Greater penalties
  4. Filing of various returns
  5. Non- recognition 
  • PAN Card – Pan is a mandatory document while converting the business needs across formats. This should include the PAN Card of every partner of the business who is a part of the LLP (Foreign nationals may supply their passport).
  • Address Proof –  Each of the partner’s address proof is to be submitted in the process to convert a business from a sole proprietorship to an LLP.  This address proof can be in the formats such as Aadhar card or Voter ID or Passport or Driving License.
  • Photograph – A newly taken picture of each of the partner in the LLP list. The picture shall be in the form of formally dressed and groomed, the size of this picture must be a passport size.
  • Business Address Proof –  You must submit the organization address and it could in any of these formats such as an electricity bill or telephone bill.
  • Rent agreement – If the registered office of your business is in a rental building, you should provide rental agreement and No Objection Certificate from the owner.
  • NRI/ Foreign National – If any of your partners is either an NRI or a foreign national, all the documents of the partner should be notariz

All about Limited liability partnership

Limited Liability Partnership

LLPs are in law regarded as ‘bodies corporate’ and are subject to aspects of company law, but for tax they will generally be treated as ‘partnerships’. The members provide working capital and share any profits. Members who are individuals will be liable to pay income tax under self assessment, and self-employed Class 2 and Class 4 National Insurance contributions. Members who are companies will be liable to pay corporation tax on their share of profits.

The members of an LLP have limited liability, but the LLP is liable for all its debts to the full extent of its assets. To the extent that the members have contributed to those assets, a member risks losing that amount should the creditors claim those assets.

An LLP has unlimited capacity which means that third parties need not be concerned about any restrictions or activities.

Disadvantages of  the Limited  liability  partnership

Inclusion of Indian Citizen as a Partner – An NRI/Foreign national who wants to incorporate an LLP in India shall have at least one partner who is an Indian citizen. Two foreign partners cannot form an LLP without having one resident Indian partner along with them.

Transfer of Ownership –If a partner wants to transfer his/her ownership rights then he/she has to obtain the consent of all the partners.

Filing of various returns – Public disclosure is the main disadvantage of an LLP. An LLP must file Annual Statement of Accounts & Solvency and Annual Return with the Registrar each year. Income Tax Return must also be filed to the Income tax department for the LLP.

Number of partners –A limited liability partnership must have at least two members. If one member chooses to leave the partnership, the LLP may have to be dissolved.

Non- recognition – LLPs are limited by state regulations due to which they are not given due recognition in every state as a business structure.

Huge penalties –The cost of non-compliance of procedural matters such as late filing of e-forms is very high which would lead to huge sum of penalties owing to Rs.100 for every day till the time the offence of late filing continues.

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.