Convert Proprietorship to Partnership Service in Kerala- BookMyTM

Convert Proprietorship to Partnership

Why Convert to Partnership from Proprietorship?

A proprietorship business can be converted to Partnership firm once the proprietor needed to add one or more partner to get support in terms of man power or financial support or intellectual support or all these together. The conversion from Proprietorship to a much organized Partnership firm, the business is likely to pass through procedural requirements. With the conversion to Partnership, all the assets, liabilities and rights of the proprietor over the business will passed on to the partnership firm; subject to the consent of partners.

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Benefits of converting Proprietorship to Partnership

Shared Responsibilities

The word partnership itself defines the formation of the business by combining two or more individuals there with called as partners for the business. Therefore partners share the responsibility to work and manage the business together. They can divide duties and responsibilities to one or more partners by mentioning the same in the Partnership Deed.

Shared Returns & Liabilities

By converting a Proprietorship business in to Partnership, the accumulated loss and unabsorbed depreciation of proprietorship adjusted as loss/depreciation of the successor partnership firm. There for all the assets and liabilities of the proprietorship firm turns to the same of the newly formed partnership firm immediately after the formation.

Flexibility in Operations

As the partnership firm is incorporated on the basis of Partnership Deed executed by the partners, they can decide how to operate the business with mutual consent. Partnership Deed can be changed according to the requirements from time to time even after the registration of the partnership. There are no limitations on partners in regards to running the business, as long as it is covered under the signed agreement.

You can pre-define Objective or Time line

While forming a partnership firm, the partnership deed enumerates pre-defined business objectives and activities, which are the main objective to commence business. A partnership can be formed for a particular time period or to complete a specific project or for a particular objective and once the same is completed the partnership will automatically dissolved. Otherwise, it can be continued as long as the partners ‘WILL’.

Documents Required for Converting a Proprietorship to Partnership Firm

PAN Card

A self attested copy of PAN Card of all the partners.

Aadhar Card

A self attested copy of Aadhar Card of all the partners.

Address Proof

Voters ID/Passport/Driving License/ Any other valid address proof by state/central governments.

Business Address Proof

Electricity/ Telephone bill of the registered office address

Rent Agreement

Rent agreement and NOC from owner of the place of business, if rented.

Details about the Proprietorship Business

Details of registrations in case anything like GST Registration or any other kinds of registrations acquired from Government departments need to be submitted for change of status of business

Statement of Assets and Liabilities

Statement of Assets and Liabilities certified by a Charted Accountant

Convert Proprietorship to Partnership 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

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Your queries will be answered quickly and effectively.
Provide details & upload documents required for registration
Drafting a partnership deed
Sending for confirmation
If there is no corrections/changes, take print out on Stamp paper of prescribed value and send scanned copy of it back duly signed by all the partners.

Step 03

Get your Partnership firm registered.

On receipt of signed partnership deed Application for PAN will be processed (will take 7 to 14 working days)
Application for TAN

All these take 15 Working Days*.
*Subject to government processing time.

The Process to Convert a Proprietorship to Partnership

Day 1

Collection of Information
Discussion and Collection of required documents

Day 2 - 3

Verification of information and documents provided
Drafting of Partnership Deed
Review and confirmation from partners

Day 4 - 5

Payment of Stamp Duty for Partnership Deed
Notarization of Partnership Deed
Application for allocation of PAN and TAN

Day 6 - 15

Registration of Partnership Deed, if subscribed
Certificate of Registration from Registrar of Firms*
*Subjected to Government Processing Time

FAQ

1. What is the benefit of converting a Proprietorship to a Partnership Firm?

Converting a proprietorship to a partnership firm allows for shared responsibility, increased capital, and diverse expertise, which can enhance business growth and operational efficiency. It also provides a more structured legal framework and can improve credibility with stakeholders.

2. Is it mandatory to register a Partnership Firm after conversion?

No, registering a partnership firm is not mandatory under the Indian Partnership Act, 1932. However, registering the firm offers legal benefits, such as the ability to file lawsuits against third parties and better enforceability of the partnership agreement.

3. What are the key documents required for conversion?

Key documents include:

A Partnership Deed outlining the terms of the partnership.
Consent of the proprietor and incoming partners.
PAN and identity/address proofs of all partners.
Updated business registration and tax documents.
Details of assets and liabilities to be transferred.

4. How long does the conversion process take?

The conversion process typically takes 15-30 days, depending on the preparation of the Partnership Deed, compliance with legal requirements, and registration with the Registrar of Firms (if applicable).

5. Will the business name change after conversion?

The business name can remain the same or be changed based on the agreement among partners. If you wish to retain the original name, ensure it complies with the Partnership Act and is available for use.

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

The assets and liabilities of the proprietorship are transferred to the partnership firm as per the terms outlined in the Partnership Deed. Proper documentation and valuation are essential to ensure a smooth transfer.

7. Are there any tax implications during the conversion?

Yes, there may be tax implications, such as capital gains tax, depending on the transfer of assets. It’s advisable to consult a tax professional to understand and comply with applicable tax laws.

8. Can a Proprietorship be converted to any other business structure?

Yes, a proprietorship can also be converted into other structures like a Private Limited Company or an LLP, depending on the business needs and goals. Each structure has its own legal and compliance requirements.

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

It’s good practice to inform clients, vendors, and other stakeholders about the conversion to ensure transparency and maintain trust. Update contracts, agreements, and business communication accordingly.

10. How can BookMyTM assist in this conversion process?

BookMyTM provides end-to-end support, including drafting the Partnership Deed, ensuring compliance with legal and tax requirements, and facilitating registration (if required). Our experts guide you through every step for a hassle-free transition.