Proprietorship to Partnership Firm Conversion
Where most of the businesses start as a proprietorship firm, one can always change the business structure by exploring the benefits of partnership by adding a partner. Especially when the operations reach certain esteemed levels, a partner may be required to increase the efficiency and act as a catalyst for the faster growth of the present business. With the increase in the number of partner(s) in the business, the efforts and capital both would increase propelling the business growth. For conversion from an unorganized business structure to a partnership firm, the business is likely to pass through procedural requirements. Once the business is converted to the partnership, all the assets, liabilities and rights accompanied to proprietorship will be passed on to the partnership firm; subject to the consent of partners.
Get your proprietorship firm converted into partnership in the fastest possible manner.
It usually takes 7 to 10 working days.
- Issue of Incorporation Certificate along with PAN and TAN
- Includes Govt Fees & Stamp duty for Authorised Capital upto Rs. 1 Lakh
- Excludes foreign national / Body Corporate as director or business needing RBI/SEBI approval
- Assistance in Opening Bank Account
- Businesses looking to expand or scale operations on higher level
- Businesses looking to convert their existing proprietorship firm into partnership
- Businesses aiming to work globally or with reputed clients
Preparation of Incorporation Documents
Getting those docs signed by the respective stakeholders
Filing of e-Forms with ROF
Receipt of Incorporation Certificate with PAN, TAN, GST, EPF, ESI & Bank Account.
Name, Contact Number and Email Id of all the Stakeholders.
Directors Identification Number, if already.
Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.
Apostilled Passport, Mobile Bill and other KYC docs in case of NRI Stakeholder.
Latest Month Personal Bank statement of all the Stakeholders.
Specimen Signatures of all Stakeholders.
Few Proposed Business Names along with Objects.
Latest Electricity Bill/Landline Bill of Registered Office.
NOC from owner of registered office, If Owned. (Download Template)
Rent Agreement from Landlord, If Rented/Leased. (Download Template)
Brief description of main business activities of the proposed Company.
Shareholding pattern (50:50 or 60:40) between the Stakeholders.
Authorised & Paid Up Share Capital of the Company.
Benefits of converting Proprietorship to Partnership
Benefits of converting Proprietorship to Partnership
Frequently Asked Questions
Whether the registration of partnership after conversion from proprietorship is mandatory?
It is not mandatory but highly recommended. If it is not registered, the firm cannot file a suit against any partner or third party. The partners also cannot sue the partnership firm for his/her claim. However, third parties can sue the firm to enforce their dues or claims. Due to non-registration, the rights of parties are not affected. Also, the partnership can be registered at any time after the formation to remove said effects.
What are the advantages of registering a partnership firm?
Under which Government Authority, the application of Partnership Firm Registration is submitted?
To be eligible to be a partner, an individual must be a major (above the age of 18), should be sane and should not be disqualified by law from entering into a contract.
A partner can nominate a successor to take his/her place in the event of death or retirement of the partner. The mode of introducing a new partner or successor is based on provisions in the partnership deed. A new partnership deed is required once the new partner is admitted into the firm.
As per Schedule-2 of CGST/SGST Act, there is no need to pay tax on the sale of stock where it is moved from proprietorship to the new firm (in case of re-structuring of business) subject to the condition that the existing proprietorship ceases to be a taxable person after such re-structuring.
In case of conversion, existing firm should cease to be a taxable person . There should not be any activity in converted proprietorship after transfer of stock into a new entity. In case, there are unutilized input tax credits lying at the time of such conversion, these credits are allowed to transfer into a new entity.
For confirming the validity of a partnership deed, the partners must pay stamp duty required as per the capital of the firm. The amount of stamp duty payable depends on the amount of capital contribution by partners. The rate of duty is prescribed under the State Stamp Act that differs for every State. Amount of ₹ 500 is included in our package.
The partnership firm shall also have to apply for registration under other statutes such as GST, Shop and Establishments Act and the likes; depending on the nature of the business. In case the sole proprietorship firm owns a trademark, the change regarding the inclusion of partner needs to be added in the trademark registry.
Partnership firms do not need to prepare audited statements for each year. However, depending on the turnover and a few other criteria, a tax audit statement might be necessary.
Yes, you will have to apply for a new GST registration and then surrender the one taken in the name of proprietorship firm. You can get the GST registration done with TAXAJ at an additional cost.