HOW TO CONVERT SOLE PROPRIETORSHIP INTO PVT LIMITED COMPANY

HOW TO CONVERT SOLE PROPRIETORSHIP INTO PVT LIMITED COMPANY

HOW TO CONVERT SOLE PROPRIETORSHIP INTO PVT LIMITED COMPANY

 

WHAT IS SOLE PROPRIETORSHIP?

 

A sole proprietorship is the easiest business form under which one can start a business. The sole proprietorship is not a legal person under any act. It simply refers to a person or a group of persons who owns and runs the business and is personally responsible for its liabilities. A sole proprietorship can operate under the name of its owner or any other trade name. but a name different from the owner's name does not create a legal entity separate from the sole proprietor owner.

 

WHAT IS PRIVATE LIMITED COMPANY?

 

As per section 2 (68) of Companies Act, 2013 a private company is a company which

 

  1. restricts the right to transfer its shares

  2. except in the case of One Person Company, limits the number of its members to two hundred

  3. Prohibits any invitation to the public to subscribe for any securities of the company.

 

Apart from the definition of Companies act, private limited is a separate legal entity from its owner, and liability of the members is limited up to the amount of share held by them, the share of the private limited cannot be publicly traded.

 

WHAT ARE THE BENEFIT OF CONVERSION?

 

  1. Private Limited Company is a separate legal entity from its owner

  2. Liabilities of the members or owners are limited.

  3. Private limited are eligible to get certain tax benefit on their expenditure

  4. An incorporated body can easily  attract fund as compared to a sole proprietor

  5. A private company can grow its business at multiple levels.

 

HOW TO CONVERT SOLE PROPRIETORSHIP INTO PRIVATE LIMITED COMPANY?

 

Step 1 

We have two options whether we can incorporate a fresh private limited company and then can merge the sole trader into it, or we can merge the sole business into any existing incorporated company

We the Legal bank with the help of our expert professionals will provide you conversion options as per your suitability and requirement of you.

Step 2

MOA of the private limited company should have a clause to take over the sole proprietorship in the object clause of the memorandum of the association if there is no such clause it should be changed accordingly

TheLegalBank with the help of our expert professionals will provide you an amendment in the memorandum of association of the Company in minimum time.

Step 3

Then all business assets will have to be transferred to the Private Limited Company, including the novation of existing contracts of the old business.

Step 4 

Capital gain in case of the transfer of the asset is exempted in section 45 of the income tax Act, 1961

Step 5

If a sole trader has incurred some GST liability then he needs to be paid the same.

 

HOW TO OPERATE AFTER CONVERSION?

After the conversion, all transactions should be done in the name of the Company.

 

BUSINESS PROBLEMS? ONE SOLUTION! - THE LEGAL BANK (ZUMOSUN GRP)

TheLegalBank provides the best solutions related to the incorporation and conversion services or your business problems at a single platform, you can contact us on 9116098980 or drop an email at caprakash69sharma@gmail.com for the first free consultation. Our experts are available to serve you.

Visit us on Zumosun / TheLegalBank.