Convert Partnership to Private Limited Company

Expand your business reach with better funding , credibility and security by converting to private limited company.

Starts from ₹ 23,199 (All Inclusive)

Convert Partnership to Private Limited Company

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Conversion of Partnership firm into Private limited co.

The major benefit of registering a private limited company is that it gives a status of a separate legal entity which a partnership firm does not have. In case of a partnership, a partner ’s personal assets are attached and they would be held personally responsible for each and every debt or liability that the business incurs. Hence, with the expansion of business, if partners want to increase its credibility and put limited liability on its members, it is more favorable for the partners to convert their partnership into a private limited company. Even though statutory compliance for a private limited company are higher than those of a partnership firm, it gives the company more opportunities to flourish and expand its reach.

Benefits of conversion from partnership to a private limited company

Documents required to convert partnership to private limited company

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Call us at: 1800 313 4151 or Email us: support@legalwiz.in

Formulation of Company Name

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Process of conversion of partnership firm into private limited co

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Private Limited CompanyOne Person CompanyLimited Liability PartnershipPartnership FirmProprietorship Firm
ActCompanies Act, 2013Companies Act, 2013Limited Liability Partnership Act, 2008Indian Partnership Act, 1932No specified Act
Registration RequirementMandatoryMandatoryMandatoryOptionalNo
Registration under the Act is mandatory to set up business as Private Limited CompanyRegistration under the Act is mandatory to set up business as One Person CompanyRegistration under the Act is mandatory to set up business as Limited Liability PartnershipBoth registered and unregistered partnerships are legal, but registered entity is preferredThere is no registration criteria prescribed. But registration to establish legal identity is recommended
Number of members2 – 200Only 12 – Unlimited2 – 50Only 1
Requires minimum 2 and not more than 200 shareholdersOnly an individual being Indian resident can be the shareholderNo bar to maximum number of partners, but minimum 2 Designated Partners are requiredIt is formed with minimum 2 partners, but not exceeding 50The proprietor is the only owner of the firm
Separate Legal EntityYesYesYesNoNo
Private Company is separate entity and can own assets in its nameOPC is separate entity and can own assets in its nameLLP is separate entity from partners and can own assets in its namePartnership firm does not have any separate identity from its partnersProprietor and the business are same and not different
Liability ProtectionLimitedLimitedLimitedUnlimitedUnlimited
Liability of members is limited to the extent of unpaid value of shares subscribedLiability of member is limited to the extent of unpaid value of shares subscribedLiability of partners is limited to the capital amount agreed to introducePartners are jointly and severally liable to pay the debts of the Partnership FirmProprietor’s liability is to pay-off all debts and obligation of firm
Statutory AuditMandatoryMandatoryDependentNot mandatoryNot mandatory
Auditor must be appointed within 30 days of incorporationAuditor must be appointed within 30 days of incorporationApplicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 LakhStatutory audit not applicable. Tax audit may be applicable based on turnoverStatutory audit not applicable. Tax audit may be applicable based on turnover
Ownership TransferabilityShares can be transferred with consent to other ShareholdersNoYesNoNo
Shares can be transferred with consent to other ShareholdersShares are not transferable easilyOwnership can be changed with consent of other partnersOwnership is not transferable easily, clause of partnership deed should be referredFirm in no different from proprietor and so ownership is not transferable
Uninterrupted ExistenceYesYesYesNoNo
Change in members or director does not affect the existence of Private CompanyChange in members or director does not affect the existence of OPC.
The nominee will take place of member
Change in Partners or Designated Partners does not affect the existence of LLPChange in partner leads to dissolution or formation of another partnership firmDeath or insolvency of proprietor directly affects the firm
Foreign ParticipationAllowedNot AllowedAllowedNot AllowedNot Allowed
Foreign national are allowed to invest under the Automatic RouteMember, nominee and director must be Indian residentForeign nationals are allowed to subject to FDI GuidelinesForeign nationals are not allowed to be a partnerForeign Nationals cannot commence proprietorship business
Tax RatesModerateModerateHighHighLow
Tax rate applicable for small companies is reduced to 25%Tax rate applicable for small companies is reduced to 25%With tax rate of 30% on business profit, tax benefits to partners is highWith tax rate of 30% on business profit, tax benefits to partners is highTax rates of individual applied to Proprietorship Firm
Statutory CompliancesHighModerateModerateLessLess
Apart from Annual filings, it has to comply with various provision laid down, but less compared to public companyApart from Annual filing, compliance are less compared to Private CompanyAnnual filing and few event based filings are necessarySeparate ITR of partnership is filed, else there are no filing requirementNo compliances and no requirement to file separate ITR
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Explore partnership to private limited company conversion

Frequently Asked Questions

For Private Company registration, the following requirements must be fulfilled:

  1.   Minimum 2 directors shall be appointed, out of which one must be a resident of India.
    2. Minimum 7 shareholders are required for this registration. Here, an individual may become shareholder and director at the same time.
    3. A place of business in India must be provided as a registered office address

While registration, minimum authorized capital of  ₹1 Lakh should be provided. The requirement of minimum paid-up capital is eliminated as a part of Government’s initiative to simplify business registration in India. However, each shareholder must subscribe at least 1 share for the registration and amount sufficient to run a business should be introduced.

Any person above the age of 18 years can become a director in the company after procuring Director Identification Number (DIN). As there are no criteria provided in terms of citizenship or residency, a foreign national can also become a director. The application of DIN Allotment is now merged with the application for the formation of a company subject to a limit of maximum 3 DIN.

A private limited company must hold a Board Meeting at least once in every 3 months. In addition to the Board Meetings, an Annual General Meeting must be held by the Private Limited Company at least once every year.

100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, and in such cases, approval must first be obtained from RBI prior to the investment.

There is no concept of a common seal in partnership. But a private limited company has a common seal which denotes the signature of the company and every company shall have its own common seal.

No Capital Gains tax or stamp duty shall be charged on transfer of property from Partnership firm to a Private Limited Company.

The accumulated loss and unabsorbed depreciation of Partnership firm are deemed to be loss/ depreciation of the successor company for the previous year in which conversion was effected. Thus, such a loss can be carried out for a further eight years in the hands of the successor company.

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Till date, it is a very good experience with the team, especially Ms. Pooja & Ms. Krishna done their jobs very nicely. Thanks to the entire team for their support.

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August, 2018

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August, 2018

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July, 2018

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July, 2018

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Abdul Bari
July, 2018

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July, 2018

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Naveen Gupta
June, 2018

Very quick service for incorporation of the company. Fastest among other service providers in the country. Regards, Sambhaji

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June, 2018
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Convert Partnership to Private Limited Company

Expand your business reach with better funding, credibility, and security by converting to private limited company.
Get Started