Proprietorship Firm
Suitable Business Ideas for Sole Proprietorship Registration
Registering as a sole proprietorship firm is the simplest way for anyone who wants to start a small business without long paperwork or high costs.
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Convert Proprietorship to Private Limited Company
Move the business into a structure investors, lenders and large customers already trust. A private limited company is legally separate from the people who own it, and ownership in it can be transferred.
- Digital signatures for every director and shareholder
- Name reservation through the RUN form
- MoA and AoA drafted with the takeover object included
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- DIN, PAN and TAN applied for with the incorporation
- Typically completed in 12 to 15 working days
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Converting a proprietorship into a private limited company
What changes when the business becomes a company, what the memorandum has to say about the takeover, and why founders choose LegalWiz.in.
Most businesses start as a proprietorship because the compliance is light. Once the business grows, the case for limiting the liabilities and moving the compliance burden off one person becomes the stronger one, and converting into a private limited company is the usual way to do it.
The conversion is a takeover. The promoters enter into an agreement for the sale of the business to the company, and the Memorandum of Association must state "the takeover of a Sole Proprietorship Concern" as one of its objects. Without that clause in the MoA the two halves are simply an incorporation and a sale.
A private limited company is a separate legal entity, existing apart from its members. It owns assets and enters into contracts in its own name, its members have no personal liability to its creditors beyond their holding, and it carries on unaffected by the death or departure of any member.
- Governed by
- Companies Act, 2013
- Directors
- Minimum 2
- At least one resident in India
- Shareholders
- 2 to 200
- A director may also be a shareholder
- Authorised capital
- ₹1 lakh
- Fee is paid on it; nothing has to be paid up
- Capital gains
- Exempt on conditions
- Under section 47(xiv) of the Income Tax Act
- MoA object
- Takeover clause
- The MoA must name the takeover of the proprietorship
- Turnaround
- 12 to 15 working days
- Subject to government processing
- Board meetings
- Every 3 months
- Plus one AGM each year
Why businesses choose LegalWiz.in
- An expert team of qualified CA, CS and lawyers
- A dedicated relationship manager with on-call support
- The entire conversion is handled online
- Quick turnaround and economical pricing
- Thousands of happy customers across every state in India
- Backed by secure technology
- Exclusive partner offers on web hosting, payment gateways and more
What the conversion covers
Your relationship manager and the filing team handle everything below. You supply the documents once and approve the drafts.
- Digital Signature Certificate (DSC) for every director and shareholder
- Name availability check against the naming guidelines
- Name reservation through the RUN form
- Drafting of the MoA and AoA, including the takeover object
- Payment of stamp duty and notarisation of the required documents
- Filing of the company registration application
- DIN allotment for the directors
- PAN and TAN application for the company
Government fees and stamp duty are charged at actuals. The transfer of the business to the company is a taxable event unless the conditions in section 47(xiv) of the Income Tax Act are satisfied, and your relationship manager will walk you through them before the agreement is drawn.
How to decide the company name
A unique first part
This builds the company’s brand, and a coined word is the strongest choice because it is least likely to already be taken.
A business object
The second part of the name should suggest the activity the company carries on.
The constitution type
The name must end with "Private Limited" as a suffix.
Two names, with reasons
The RUN form takes two proposed names with their significance. Both must be unique and follow the naming provisions.
Benefits of converting into a private limited company
Separate legal existence
The company is a separate legal entity, existing apart from its members. It can own assets, enter into contracts in its own name and sue a third party. Members have no personal liability to the company’s creditors beyond their holding in it.
Limited liability of directors
A director’s personal assets are untouched where the company has outstanding debts. Only the money invested at incorporation, and the assets of the company itself, are available to pay what it owes.
Easy transferability
Ownership can be transferred to an individual or to another company by transferring shares with the consent of the shareholders. In a proprietorship no such transfer is possible at all.
Uninterrupted existence
Being a separate legal entity, the company has perpetual succession. Unlike a proprietorship it is unaffected by the death or departure of any member, and continues in existence whatever changes in its membership.
How a private limited company compares
A private limited company is one of four structures a proprietor can move to. Here is the whole field, with the private limited company first.
| Attribute | Private Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Proprietorship Firm |
|---|---|---|---|---|---|
| Setting it up | |||||
| Applicable law | Companies Act, 2013 | Companies Act, 2013 | LLP Act, 2008 | Indian Partnership Act, 1932 | No specified Act |
| MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the LLP Act | OptionalCan be registered or unregistered, though there are clear benefits to registering with the State ROF | Not requiredMSME or GST registration is treated as valid proof for a proprietor firm | |
| 2 to 200Excluding present or former employees who are members | Only 1A single shareholder | 2 to unlimitedMinimum 2 designated partners, no cap on the total | 2 to 50Minimum 2 partners, maximum 50 | Only 1The proprietor is the sole owner | |
| AllowedUnder RBI and FEMA rules, usually via the automatic route | Not allowedMember, nominee and director must be Indian residents | AllowedUnder RBI and FEMA rules, usually via the automatic route | AllowedAn NRI can be a partner, subject to RBI regulations | Not allowedA foreign national cannot own a proprietorship business in India | |
| What you are liable for | |||||
| YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | NoThe firm has no identity separate from its partners | NoProprietor and business are the same, and share one PAN | |
| LimitedLimited to the share capital subscribed, unless the MOA defines it otherwise | LimitedLimited to the share capital subscribed | LimitedLimited to the contribution agreed in the LLP agreement | UnlimitedPartners are jointly and severally liable for the debts | UnlimitedClearing the firm’s liabilities is the proprietor’s job | |
| YesSurvives a change of ownership or management | YesBut it can only ever have one owner | YesA change of partners does not affect the LLP | NoA change of partner dissolves or reforms the firm | NoDeath or insolvency of the proprietor ends the business | |
| YesShares transfer easily, which is why external investors prefer it | Restricted100% of shares must move to change the single owner | YesBy consent of the other partners, via a supplementary deed | RestrictedThe partnership deed sets out the restrictions | NoA proprietorship cannot be transferred | |
| What it costs you every year | |||||
| MandatoryAn auditor must be appointed within 30 days | MandatoryAn auditor must be appointed within 30 days | As applicableRequired once turnover crosses ₹40 lakh or contribution crosses ₹25 lakh | Not mandatoryTax audit applies based on turnover | Not mandatoryTax audit applies based on turnover | |
| Moderate25% for companies with turnover up to ₹400 crore | Moderate25% for companies with turnover up to ₹400 crore | High30% on business profits, with tax-efficient distribution to partners | High30% on business profits | LowTaxed at the proprietor’s individual income tax slab | |
| HighThe heaviest of the five, both annual and event based | HighSimilar to a company, without an AGM | ModerateAnnual filing plus a few event based filings, lighter than a company | LowAn annual ITR, and little else | LowNo separate ITR, and very little else | |
| Next step | Get started | Know more | Know more | Know more | Know more |
Swipe the table sideways, Private Limited Company stays in view. Open any attribute to read the detail behind all 5 answers.
Customer reviews
What our clients say
- Rated 5 out of 5
Had a great experience with LegalWiz for my trademark registration. The service was smooth, and the after sales support was excellent. Although the filing took around 3 days, the team stayed connected throughout, provided clear updates, and there were no communication issues. Overall, a very professional and reliable experience.
Vishvam PGJune 2026 - Rated 5 out of 5
Had a wonderful experience. The team was very supportive, responsive and completed everything on time. Thank you for the excellent support.
Ujwala ShettyJune 2026 - Rated 5 out of 5
Jignesh was very helpful and amazing while filling the compliance form for my business. Will take your service again.
Sumit YadavApril 2026 - Rated 5 out of 5
Good support team. No hindrance in executions. Go for it.
Upkar ChaurasiyaApril 2026 - Rated 5 out of 5
JIGNESH BHAI, I wanted to take some time to sincerely thank you for your incredible support with my MSME registration through LegalWiz. From start to finish, Jignesh Bhai, your guidance, patience, and professionalism made what could have been a stressful and confusing process feel completely smooth and manageable. You took the time to explain every step clearly, answered all my questions patiently, and ensured that nothing was left uncertain. Your attention to detail and dedication truly stood out, and it gave me a lot of confidence throughout the process. I really appreciate the effort, care, and commitment you put into helping me. Jignesh Bhai, your service has been exceptional, and I couldn’t have asked for a better experience. Heartfelt thanks once again!
Rahul SharmaApril 2026 - Rated 5 out of 5
Highly recommend services from Legalwiz. Got my LLP conversion process faster. Helpful staff.
Sharad PatelJanuary 2026 - Rated 5 out of 5
Limited Liability PartnershipHad a great experience working with the team! They handled my LLP registration smoothly, guided me clearly through every step, and were always quick to respond. Really appreciate their professionalism and support. Highly recommended!
Rishi KhannaJanuary 2026 - Rated 5 out of 5
They are so quick and highly professional and experienced in the industry to carry out the requirement. Loved their services.
SHASHANK S PANDEYJanuary 2026 - Rated 5 out of 5
Trademark RegistrationVery fast & timely service. The team was very helpful and helped me find out if the brand name was available or not over the call itself without any extra cost or charge. Brilliant service, very clear communication, timely delivery & transperant pricing. Cheers!
Naman PiparaOctober 2025 - Rated 5 out of 5
Trademark RegistrationSatisfied with your unit service and fee grateful to connect with you service providers staff thanks regards Shivlal
SHIVLAL MALVIYAOctober 2025 - Rated 5 out of 5
File INC-20AI am very much satisfied with their service for INC 20 A. i will recommend them and definitely will keep in mind for any other service.
MANINDER KaurMarch 2025 - Rated 5 out of 5
Close a Private Limited Companyexcellent, i appreciate accountability and transparency in the process
Aditya BansalMarch 2025 - Rated 5 out of 5
Private Limited CompanyLegalwiz is doing its best to give good service to clients.
Sunil ChauhanMarch 2025 - Rated 5 out of 5
Trademark RegistrationRecently got Trade Mark registered
Devendra DklMarch 2025 - Rated 5 out of 5
Trademark RegistrationIt was an amazing experience from the support team. Thank you...
Aswin MMarch 2025 - Rated 5 out of 5
GST RegistrationHad a Seamless Experience in registering for GST. Been associated with them for 5 yrs now, and have done several LLP and GST registrations. Happy with their service, so i keep coming back.
Mr KarthikFebruary 2025
Documents required to convert into a private company
The same set is needed for every director and shareholder, plus one document that is specific to the proprietor.
PAN card
For every director and shareholder. A foreign national provides a passport instead.
Address proof
The Aadhaar card and the voter ID, passport or driving licence of every director and shareholder.
Photographs
A recent passport size photograph of every director and shareholder.
Business address proof
The latest electricity or telephone bill for the registered office address.
NOC from the owner
A no objection certificate from the owner of the registered office premises.
Rent agreement
The rent agreement for the registered office, where the premises are rented.
Income tax return acknowledgement
The sole proprietor has to submit an acknowledgement of the income tax return filed for the proprietorship.
Convert into a company in three easy steps
Step 01
Answer a few quick questions
- Spend less than 10 minutes on a simple set of questions
- Share the basic details and documents against the checklist
- Pay through a secure payment gateway
Step 02
Our experts take over
- You are assigned a dedicated relationship manager
- Digital signatures are procured and the name is reserved
- MoA and AoA are drafted, including the takeover object
- The incorporation application is filed with DIN, PAN and TAN
Step 03
Your company is registered
- The whole process takes 12 to 15 working days
- The Certificate of Incorporation is issued in the name of the company
Subject to government processing time.
How long the conversion takes
Fifteen working days end to end. Everything we control is done by day 10; the last five are the registrar’s.
Day 1
1 of 15 working days
- Application for the Digital Signature Certificate
Days 2 to 4
3 of 15 working days
- Name availability check
- Application for name reservation under RUN
- Name reserved by the registrar
Days 5 to 8
4 of 15 working days
- Drafting of the MoA, AoA and the other required documents
- Payment of stamp duty
- Notarisation of the required documents
Days 9 to 10
2 of 15 working days
- Filing of the company registration application
- Application for DIN allotment
- Application for PAN and TAN of the company
Days 11 to 15
5 of 15 working days
- Government processing time
- Certificate of Incorporation issued
Subject to government processing time.
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What does registering a private limited company require?
Two or more members, who act as the directors of the company. It is normal practice for the shareholders to be the directors.
No minimum amount has to be brought in as capital. A fee is paid to the government for issuing shares worth at least ₹1 lakh of authorised share capital at registration, and there is no requirement to show proof of capital invested during the process.
Is a private limited company the right structure for my business?
It creates trust and credibility, which makes loans easier to obtain and attracts financial institutions, suppliers and potential clients.
Institutions and individuals prefer to invest in companies that are reliable, and a private limited company offers that reliability in a way a proprietorship or a general partnership does not. If you are looking to expand, or trustworthiness matters to your customers, it is a strong option.
How long does the company registration stay valid?
Once incorporated the company is active and in existence for as long as its annual compliances are met.
Where they are not, it becomes a dormant company and may be struck off the register after a period. A struck-off company can be revived for up to 20 years.
What compliances does a private limited company have to meet?
A board meeting has to be held at least once every three months. In addition, an annual general meeting has to be conducted at least once every year.
Meeting the annual compliance requirements is what keeps the company’s status active.
How is the company name reserved?
Through a web form called RUN, short for Reserve Unique Name, on the Ministry’s portal. The applicant submits two different names with their significance.
Both names must be unique and in accordance with the naming provisions.
What happens to the assets and liabilities of the proprietorship?
All the assets and liabilities of the proprietary concern relating to the business are treated as purchased by the newly formed company. That makes the proprietor liable to pay tax on any capital gains calculated on the transfer.
Section 47(xiv) of the Income Tax Act provides an exemption from those capital gains where its conditions are met: broadly, that the assets and liabilities become those of the company immediately before the succession. Your relationship manager will take you through them before the agreement is drawn up.
Can a company or an LLP hold shares in the private company?
Yes. Any person is eligible to be a shareholder, at registration or afterwards. A body corporate such as a company or an LLP, and an association of persons such as a society or a trust, can also hold shares.
A group of people can hold a share in the company jointly.
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Convert your proprietorship into a private limited company
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