Convert Partnership to LLP

Why Convert to LLP from Proprietorship?

Why Convert to LLP from Partnership?

Limited Liability Partnership (LLP) is an easy to maintain business structure compared to Proprietorship. The main advantage of converting from proprietorship to LLP is that the proprietor will get partners to share the responsibilities and financials hence helps the business to reach new milestones. A LLP structure of business associates the benefits of both of the Partnership and Company. Conversion from Proprietorship to LLP will be a wise decision. As per LLP act, 2008 – one partner is not responsible or liable for another partner’s misconduct or negligence. Being an entity with separate legal existence, personal assets of partners of LLP are protected from debts of the firm to the extent of the capital share subscribed. With all these reasons, LLP is the most preferred business structure by professionals, Micro and Small businesses that are family owned or closely-held.

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Benefits of LLP compared to Proprietorship

Separate Legal Existence

A Limited Liability Partnership (LLP) has a separate legal identity than of its partners and it is governed by the LLP act 2008. As LLP is a separate legal entity, it can take legal actions, own assets and borrow funds in its name itself where as a partnership firm can’t do the above in its own identity. A proprietorship has the identity of the proprietor and hence limited business opportunities.Show Less

Limited Liability of Partners

In a Limited Liability Partnership, the liability of the partners is extent to the capital contribution subscribed. Personal assets of the partners of a LLP are protected in case of loss or debt or even while the dissolution of LLP. A partner of the LLP is not held responsible for the actions of negligence or misconduct of any other partner.Show Less

Flexibility of Operation

A Limited Liability Partnership firm is managed and run according to LLP agreement, with which the partners decide the functions of business, subscription of capital share, division of profit share, division of duties and responsibilities. LLP is a very flexible structure and the partners are free to create their own rules of management which is not possible in other business structures.Show Less

Lesser Compliance Requirement

A LLP requires lower compliances compared to a Private Limited Company. Audit report is not mandatory for LLPs until it reaches certain level of turnover. Company compliances like board meeting, statutory meeting etc. do not applicable for LLP. Professional service charges are cheaper to maintain compliances for a LLP over a Private Limited Company.Show Less

Documents Required to Convert Proprietorship to LLP

PAN Card

PAN Card of all Partners

Passport

Passport is necessary in case of any foreign nationals

Address Proof

Aadhaar/ Voter ID/ Passport/ Driving License of all partners

Photograph

Latest passport size photograph of all partners

Business Address Proof

Electricity Bill/ Telephone Bill of the office address

No Objection Certificate

NOC from the Owner of Office Buliding (If the proposed registered office premises is rented)

Rental Agreement

Rental agreement of the registered office if the office is rented

Registration Certificate

In case the partnership firm is registered with Registrar of Firms (RoF) or any other kinds of government registration such as GST or MSME etc.,

Notarization

If any partner of the LLP is a foreign citizen, documents of that partner should be notarized or apostilled.

LLP Name Structure

Build a Unique Identity

Identification plays an important role in making a business outstand in competitive market, build unique and distinctive name for your business hence enhance your brand’s trust and value. Consumers should identify activity of your business from the brand name so that they can relate your business with its offerings.
Even though it meets all the above criteria, once again make sure that the brand name to be short, easy to remember and simple to pronounce or spell.

Mention Constitution Type on Your Brand Name

The name of a registered Limited Liability Partnership must end with LLP or Limited Liability Partnership as suffix. (Example: ABC CONSTRUCTIONS LLP)

Convert Proprietorship to LLP in 3 Easy Steps

Step 01

Fill up the Registration Form

Select any Package suits your requirements
Fill up the form which will take less than 10 minutes
Make payment through secured payment gateway.

Step 02

BookMyTM is Here to Help

Your queries will be answered quickly and effectively.
Provide details & upload documents required for LLP registration
Procurement of Digital Signature Certificates
Application for name reservation
Document drafting including LLP Agreement
Filing of online application

Step 03

Your LLP is registered

Certificate of Incorporation
Application for PAN and TAN

All it takes 15 – 20 Working Days*.
*Subjected to Government Processing Time

The Process of Convert Proprietorship to LLP

Day 1 - 2

Collection of Basic Information
Collection of required documents (scanned copies)
Application for Digital Signature Certificate

Day 3 - 4

Checking LLP Name availability
Application for LLP name reservation under “LLP-RUN”
Reservation of LLP Name

Day 5 - 10

Drafting LLP incorporation document
Review and Confirmation form Partners
Filing application for LLP Registration
Application for DIN allotment for Designated Partners
Certificate of LLP Incorporation

Day 11 - 13

Application for PAN and TAN of LLP
Drafting LLP Agreement
Review and confirmation from Partners

Day 14 - 20

Payment of Stamp Duty
Filing of LLP Agreement
*Government process time may be change due to any circumstance. We hold no responsibility in such delay if in case any.

Frequently Asked Questions

1. What is the benefit of converting a Proprietorship to an LLP?

Converting a proprietorship to an LLP offers limited liability protection, separating personal and business liabilities. It enhances credibility, allows multiple partners to contribute capital and expertise, and provides a more structured legal framework for business operations.

2. Is it mandatory to register an LLP after conversion?

Yes, registration of an LLP is mandatory under the Limited Liability Partnership Act, 2008, to formalize the conversion and ensure legal recognition. This involves filing necessary forms with the Ministry of Corporate Affairs (MCA).

3. What are the key documents required for conversion?

Key documents include:

Consent of the proprietor and proposed partners.
PAN and identity/address proofs of all partners.
A Partnership Deed or LLP Agreement.
Details of assets and liabilities to be transferred.
No Objection Certificate (NOC) from creditors, if any.
Digital Signature Certificate (DSC) and Director Identification Number (DIN) for designated partners.

4. How long does the conversion process take?

The conversion process typically takes 20-30 days, depending on document preparation, compliance with MCA requirements, and approval from the Registrar of Companies (RoC).

5. Will the business name change after conversion?

The business name can remain the same, subject to availability and compliance with LLP naming guidelines under the MCA. You may need to add “LLP” to the name to reflect the new structure.

6. What happens to the assets and liabilities of the Proprietorship?

Assets and liabilities are transferred to the LLP as per the LLP Agreement. Proper valuation and documentation are required to ensure a smooth transfer, with no tax implications if conditions under Section 47(xiiib) of the Income Tax Act are met.

7. Are there any tax implications during the conversion?

If the conversion meets specific conditions under the Income Tax Act, 1961 (e.g., no change in profit-sharing ratio and no consideration other than LLP interest), it may be tax-neutral. Consulting a tax professional is recommended.

8. Can an LLP be converted back to a Proprietorship?

No, an LLP cannot be directly converted back to a proprietorship. However, the LLP can be dissolved, and the business can be restarted as a proprietorship, subject to legal and tax compliance.

9. Do I need to inform existing clients or vendors about the conversion?

Yes, informing clients, vendors, and stakeholders about the conversion is advisable to maintain transparency. You should also update contracts, agreements, and bank accounts to reflect the new LLP status.

10. How can BookMyTM assist in this conversion process?

BookMyTM provides comprehensive support, including drafting the LLP Agreement, obtaining DSC and DIN, filing MCA forms, and ensuring compliance with all legal and tax requirements for a seamless conversion.