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Proprietorship to private limited company

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    Procedure of GST Registration


    Fill the simple application form provided on our website.

    Send your documents that are required according to your category of business.

    We will file all your forms on behalf of you along with the declaration.

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    Minimum Requirements for Conversion

    • ✔   DPIN & DSC for all Partners.
    • ✔   For Conversion, there must be at least two shareholders and two directors.
    • ✔   Two directors are required, of whom at least one must be an Indian resident.

    Documents Required for Conversion of Proprietor to Private Company

    A copy of each proposed partner's PAN card.
    Passports, election cards or voter identity cards, ration cards, driving licenses, and Aadhaar cards are all acceptable forms of address or identity proof for Indian citizens not more than 2 months old.
    The Partner's Ownership Proof must include no more than 2 months old Electricity Bills, Telephone Bills, Gas Bills, Mobile Bills, or any other utility bills from the company location.
    For Digital Signature Certificate we required two most recent passport photos.
    All directors and members must provide the most recent bank statements no older than two months.
    If a rented premises agreement or property papers are required, a copy of address proof is required.
    The landlord NOC should be in given downloaded PDF format.

    Conditions for Conversion of Proprietor to Private Limited Company

    • ✔   The business receives ownership of all of the proprietorship's assets and liabilities.
    • ✔   The individual sole proprietor's ownership stake should be at least 50%.
    • ✔   The ownership of the shares must be valid for five years.
    • ✔   The sole proprietor cannot get any benefits relating to the allocation of shares.
    • ✔   The proprietorship firm and the corporation must execute a sale agreement or takeover agreement.
    • ✔   According to the MOA, one of the company's goals must be to acquire the sole proprietorship's business.

    Procedure for Conversion of Proprietor to Private Limited Company

    1. Formalities for a Slump Sale

    The owner must follow all slump selling requirements.

     

    2. Apply for DIN and DSC

    The applicant must then apply for a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).

     

    3. Verification of company name

    The company name is checked and verified in this step to ensure that it complies with the Ministry of Corporate Affairs' (MCA) requirement.

     

    4. Draft the MOA and AOA

    Next, the proprietor must draft the Memorandum of Association and the Articles of Association.

     

    5. Filling out the Form

    The applicant would file the application form to obtain the certificate of incorporation once the name of the company had been approved by the appropriate authorities.

     

    6. Document Submission

    After completing the aforementioned steps, the applicant must submit all necessary paperwork to the MCA.

     

    7. Company Incorporation

    The MCA and Registrar of Companies will issue the company's certificate of incorporation after confirming the procedure.

     

    8. Update a bank account

    The next step is to update a bank account in the company's name to manage day-to-day operations on the organization's behalf.

     

    9. Apply for a PAN and TAN Number

    The applicant must now apply with the necessary authority for a PAN and TAN number.

    Benefits of Conversion of Proprietorship into Company

    Limited Liability

    The status of being legally responsible only for a limited amount of a company's debts. As a result, where a company is limited by shares, the members' liability on a winding-up is limited to the amount unpaid on their shares. This means that if you have no balance payable on the number of shares you own, you are not liable to the company for any debt or credit amount that remains unpaid.

     

    Fund Raising

    In India, the only type of business that can raise funds from Venture Capitalists or Angel Investors is a Private Limited Company.

     

    Perpetual Succession

    This refers to the idea that even after a proprietorship business dies, the entity will continue to exist; however, it is not applicable to private limited companies. Even if a particular employee left, the business would continue to run.

     

    Better Reputation

    Compared to a sole proprietorship business, a private limited company would unquestionably have a better reputation. Due to its registration with the MCA, this registration will increase the company's reputation in the public's eyes.

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