Convert Proprietorship to Partnership
Transform business to Partnership firm and enjoy extended benefits
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Convert Proprietorship to Partnership
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.
Benefits of converting Proprietorship to Partnership
Shared Liabilities
The term Partnership, itself describes two or more individuals coming together for fulfilling some common objective. The partnerships referred here are of pure business nature. Therefore, the partners share the responsibility to work and manage the business. Partners share rights and liabilities in the business, dividing the burden of responsibilities among them. Not just money but resources, knowledge and judgment are also pooled in for improving the business.
Partner net worth is Increased
There is a distribution of Post-Tax profits among the partners with no additional tax liability. No Capital Gains tax shall be charged on transfer of property from Proprietorship to Partnership firm. The reduction of tax liabilities indirectly increases the amount of money earned which results in an increase of net worth of all the partners.
With conversion, you do not need to start new business
With conversion, the accumulated loss and unabsorbed depreciation of Proprietorship is deemed adjusted as loss/ depreciation of the successor partnership firm. All the assets and liabilities of the firm immediately after the conversion are turned into the assets and liabilities of the partnership. All movable and immovable properties of the firm automatically vest in the partnership. Hence, the conversion is easy and hassle-free.
No fixed capital investment required
The partners can internally decide on their individual investment in the firm and then divide the stakes accordingly, which gives them the flexibility to make decisions in the business. Uneven capital contribution between partners is permissible. There is no predefined limit on partners’ capital contribution, allowing the partners for putting in preferable amounts as capital and make decisions about the withdrawals mutually.
Documents Required for incorporating a partnership firm
Business proof
Electricity Bill/ Telephone Bill of the registered office address
ID Proof
Self- attested copy of Aadhar Card, Voter ID/ Passport/ Driving License of all partners. A self-attested copy of PAN Card of all partners
Details about the sole Proprietors Business
If the proprietorship firm is licensed under GST or any other registrations obtained , forms need to be submitted to the concerned departments for change of status of the business
Statement of assets and liabilities
updated statement of assets and liabilities certified by a CA.
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Convert into Partnership in 3 Easy Steps
1. Answer Quick Questions
- It takes less than 10 minutes to fill in our questionnaire
- Provide basic details & documents required for proprietorship to partnership conversion
- Make payment through secured payment gateways
2. Experts are Here to Help
- Assigned Relationship Manager
- Drafting of Partnership Deed
- Payment of Stamp Duty on Deed
- Notary of Partnership Deed
- Application for PAN and TAN
3. Your Business is Established
- All it takes is 12 working days*
Process to change into a Partnership Firm
Day 1
- Discussion and collection of basic Information
- Provide Required Documents
Day 2 - 4
- Drafting of Partnership Deed
- Review and confirmation from Partners
Day 5 - 7
- Payment of Stamp Duty on Agreement
- Notarization of Partnership Deed
- Application for allotment of PAN and TAN
Day 8 onwards
- Registration of Partnership Deed, if subscribed
- Certificate of Registration from RoF*