The real benefit of creating a private limited company is that it provides the status of an independent legal entity, which a partnership firm can't. In the case of a partnership, a partner's assets are attached, and they are individually liable for the firm’s debts and liabilities but in case of company Director’s liability is limited. When a result, as a firm grows, it is more advantageous for partners to transform their partnership into a private limited company to strengthen its credibility and restrict the liability of its members.
The Partners of the Partnership Firm must call a meeting and give their approval to the Partnership Firm's conversion to a Private Limited Company.
Get a Director Identification Number and a Certificate of Digital Signature.
The Registrar of Companies must approve the name by applying to E-FORM INC-1 to the Registrar of Companies.
The applicant must compile and file the E-FORM URC-1 and the appropriate documentation after receiving name permission from the Registrar of Companies.
After gaining name approval and Registrar approval of E-FORM URC-1, the applicant must file Memorandum and AOA and other necessary documents for incorporation at MCA portal.
The applicant must file numerous documents with the Registrar of Companies, including MOA and AOA, in the appropriate E-forms. When the Registrar is satisfied that all requirements have been met, they will issue a Certificate of Incorporation.
Documents for Registered Office Address
If you've rented a property, you'll need a letter of authorization from the owner (format given by our company)
Company Directors have less liability than partners in a partnership firm.
Easy access to capital, such as borrowing money from banks and financial organizations to expand.
Increase the company's capital base.
Share transferability, i.e., easier adjustments and alterations in shareholding, and the ability to issue share capital in various ways, as per the Companies Act of 2013.
There is no capital gain tax on property transferred from a partnership to a private limited company.
There is no stamp duty on property transfers from a partnership to a private limited company.
From an income tax perspective, the Current business's loss and unabsorbed depreciation of firm are now a loss/depreciation of the company after conversion, which can be carried forward for the next eight years.
Unregistered entities with two or more members can choose to convert their partnership into a corporation.
A minimum authorized capital of one lakh should be submitted at the time of registration. The necessity for a certain amount of paid-up capital has been removed.
Major difference between a Partnership and a Private Limited Company is, a partnership does not have its own identity; it is formed when two or more persons join forces to form a partnership. On the other hand, a company is a distinct legal entity that is considered as if it is a person in the eyes of the law.
The Partnership firm's cumulative loss and unabsorbed depreciation constitute the successor company's loss/depreciation for the prior year in which the conversion took place. In the hands of the successor company, such a loss can be carried out for another eight years.
On incorporation, the Ministry of Corporate Affairs will provide a director identification number to anyone who wishes to become a director of a company.