Proprietorship to Limited Liability Partnership
The main consideration behind the adoption of LLPs was to provide a simpler structure to administer and carry less liability than arbitrary structures. A hybrid structure is provided by an LLP, which combines the benefits of a company and a partnership firm into one organizational form.
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INTRODUCTION
Change from Proprietorship to LLP
Whether a sole proprietorship in India may be converted to a limited liability partnership (LLP) At least two candidates must be Indian residents, and there must be more than one who steps forward to join the fellowship. An Indian address is required for a registered office in a factory or place of business.
ADVANTAGES
Advantages of conversion from proprietorship to LLP
Separate Legal Existence
Unlike a general partnership, a limited liability company has its own life and is a separate legal entity from its partners. This allows the LLP to acquire the property, sign contracts in its own name, and sue other parties if they disagree.
Limited Liability of Owners
Partners' liability is restricted to the amount of capital contribution specified in the LLP Agreement by the partners. Even after the LLP dissolves, partners are not entitled to share in the loss or debt of the LLP. Furthermore, none of the partners' misbehavior or negligence can be attributed to one partner.
Flexibility to Operate
The LLP agreement governs the management and operation of the LLP. The partners determine how the limited liability partnership will operate and assign tasks to each other. As a result, it has a very flexible structure and, unlike in other business structures, the partners are free to establish their own management guidelines.
Lower Compliance Requirement
An LLP is subject to less compliance requirements than a private company, including the requirement for an audit. A statutory audit becomes necessary when a contribution or turnover threshold is met. Furthermore, clauses like the requirement for partner meetings and resolutions to operate are loosened and not always applicable.
A LIST OF DOCUMENTS
Documents required for conversion into LLP
PAN Card
PAN Card of all partnersForeign nationals may provide passport
Partner’s Address Proof
Each partner's Aadhar card, voter ID, passport, and driver's license
Photograph
Latest Passport size photograph of all partners
Business Address Proof
Bills for telephone and electricity at the registered office address
NOC from owner
A certificate of no objection must be acquired from the registered office's owner.
Rent Agreement
Rent Agreement of the registered office should be provided, if any
NRI/ Foreign National
Documents of a partner must be notarized or apostilleled in the event of an NRI or foreign national.
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Formulation of LLP Name
Special Name
Mainly it builds the LLP’s brand and preferably be a coined word
Business Object
The LLP's commercial activity should be implied by the second portion of the name.
Type of Constitution
The suffix "LLP" or "Limited Liability Partnership" must be included at the end of the LLP's name.
Convert into an LLP in 3 Easy Steps
1. Respond to Quick Questions
- Our questionnaires take less than ten minutes to complete.
- Give the essential information and paperwork needed to convert a proprietorship to a partnership.
- Pay using a safe and secure payment gateway.
2. Experts are Here to Help
- Dedicated Relationship Manager
- Procurement of Digital Signatures (DSC)
- Application for Name Reservation
- Documents drafting including LLP agreement
- Certificate of Incorporation
- Application for PAN and TAN
3. Your Business is Established
- All it takes is 21 working days*
Process to convert proprietorship to LLP
Day 1
- Consultancy and assistance for conversion
- Collection of basic information & documents
Day 3– 5
- Application for Digital Signature Certificate (DSC)
- Application for DIN allotment of Designated Partners
Day 6– 7
- Checking Name availability
- Application for Name Reservation
Day 8 – 12
- Drafting the incorporation document
- Filing form for converting sole proprietorship to LLP
- Certificate of Incorporation
Day 13– 18
- Application for PAN and TAN of LLP
- Drafting of LLP Agreement, with conversion clause
Day 19– 21
- Payment of Stamp Duty
- Filing of LLP Agreement with MCA
- Government processing time
Explore conversion of proprietorship to LLP in India
Frequently Asked Questions
- Similar to other partnerships, in order to be registered, two or more people must be named as partners, with at least one of them having to be an Indian national. India must be the location of the business’s registered address.
- There are no restrictions on a partner’s ability to become a citizen or resident under the LLP Act, 2008. If at least one of the designated partners is an Indian resident, foreign nationals, including foreign companies and limited liability partnerships (LLPs), are permitted to incorporate in India. The individual must, however, be at least eighteen years old, incapable of becoming a minor, and able to sign a contract. The suggested Designated Partner must also possess a DIN.
- Since registrations under the name of a proprietorship firm cannot be changed, the procedure for converting a proprietorship into an LLP must be submitted to the relevant department. If not needed for any other reason, all registrations made in the proprietorship’s name must be turned in.
- Yes, an individual may operate more than one business under an LLP as long as the ventures are similar or linked. Accounting and fashion design are examples of unrelated activity that cannot be conducted under the same LLP. The agreement lists the business operations that require RoC approval.
- The Limited Liability Partnership must adhere to the annual compliance requirements when it is incorporated. An audit of the financial statements is not necessary if the LLP has a capital contribution of less than ₹25 lakhs or a turnover of less than ₹40 lakhs. Please read our blog post “Mandatory Compliances for a Limited Liability Partnership (LLP)” for further information.
- Is it possible for an LLP to register for non-profit activities?
Since an LLP must turn a profit in order to exist, it cannot be formed to carry out non-profit endeavors.