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Conversion
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All about Sole Proprietorship to Private Limited
All you need to know
Before starting with the procedure of conversion of Proprietorship to Private Limited Company
Sole Proprietorship:
A sole proprietorship firm is such a type of business entity that is owned, controlled and managed by a single person. The owner of the Business is called Sole Proprietor of the Firm. As the business is run by a natural person, there is no legal difference between the promoter and the business. The promoter himself receives all the profits.
Private Limited Company:
A Private Limited Company is that type of company that offers Limited Liability or legal Protection to its shareholder. Private Limited Company in India lies somewhere in between a partnership firm and a widely owned public company. It can be registered with a minimum of two people. A person can be both a director and shareholder in a Private Limited Company.
Conversion of Sole Proprietorship to Private Limited Company:
Many business people start their businesses as a Sole Proprietorship due to the low compliance requirements. As a business grows, the demands of business and the drawbacks of a proprietorship firm makes it necessary for an entrepreneur to start the process for conversion of proprietorship into a pvt Ltd Co.
The minimum requirement to be fulfilled for the conversion of Proprietorship to Private Limited Company:
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An agreement must be entered into between the sole proprietor and the private limited company for conversion.
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All the benefits and liabilities of the sole ownership firm should be converted to the private limited company.
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The sole proprietor does not receive any benefit or consideration, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company.
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The Memorandum of Association (MOA) of the Private Limited Company must include an object that states – “The takeover of a sole proprietorship concern”.
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The sole owner ought to be a member of the organization’s directorial board.
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It might be noticed that a private limited company must have at least two directors.
The liability of the members in a Private Limited Company is limited to the number of shares held by them. A private Limited company in India can start its business after getting the certificate of incorporation. It can be incorporated within 5-6 working days.
EbizFiling.com is an eminent business platform and a progressive concept, which helps end-to-end incorporation, compliance, advisory and management consultancy services to clients in India and abroad. Incorporating a Private Limited Company is easy, seamless, cheaper and quicker with EbizFiling.com! Apart from a Private Limited Company, EbizFiling.com also helps entrepreneurs with Public Limited Company Registration, Partnership Registration, HUF, LLP Incorporation and One Person Company registration easily. You may get in touch with us for free advisory on all the services.
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ESSENTIAL
₹ 7399/-
(All Inclusive)
- 2 Digital Signature Certificates
- 2 Director Identification Numbers
- Name Approval Application under SPICe Plus
- Stamp duty on INR 1 Lakh Authorized Capital
- Company Incorporation using SPICe Plus
- Copy of e-MOA
- Copy of e- AOA
- e-PAN
- e-TAN
- 2 e-copies of Share Certificates*
- ESIC Registration through SPICe Plus*
- PF Registration through SPICe Plus*
- Bank Account opening (feature) through SPICe Plus
Reasons for conversion of Sole Proprietorship to Private Limited Company
Points to make your decision easy
No Minimum Capital
No minimum capital is required to form a Private Limited Company. A Private Limited Company can be registered with a mere sum of Rs. 10,000 as total Authorized Share capital.
Separate Legal Entity
A Private Limited Company is a separate legal identity in the court of the law, meaning assets and liabilities of the business are not same as the assets and liabilities of the directors.
Limited Liability
It means that if the company go though some financial distress because of business activity, the personal assets of members will not be used to pay the debts of the Company.
Fund Raising
Private Limited Company in India is in existence for a long time and actually enjoys widespread acceptance across the world. It is the only form of business other than public limited company to raise fund from the Venture Capitalist or Angel investors.
FDI Allowed
Private Limited Companies and other Limited Companies are those entities that allow for Foreign Direct Investment up 100 %. It means any foreign entity or foreign person can directly invest in a Private Limited Company with 100% share holding capacity in the company.
Builds Credibility
All the information relating to the company such as name, office address, status etc. are made available in a public database. This feature makes it easy to authenticate the existence of the business that helps in improving business credibility.
Documents Required for conversion of Sole Proprietorship to Private Limited Company
Quick Checklist
- Photograph of all the Directors
- PAN Card of all the Directors
- ID Proof of all the Directors (Driving License/Passport/Voter ID)
- Electricity Bill or any other utility bill for the address proof of the Registered Office
Specific Requirements
A Company must have a registered office in India. Documents like bank statement or electricity bill should not be older than 2 months. Along with that utility bill, rent agreement or sale deed and a No Objection Letter (NOC) from the landlord with his/her consent to use the office as a registered office of a company must be submitted.
Conversion of Proprietorship to Private Limited Company- Process flow
5 Easy Steps
1
Obtain DSC
2
Reserve Your Company Name
3
Submission of MOA & AOA
4
Get Company’s Incorporation Certificate
5
Get Company’s PAN & TAN
Fill a Simple Checklist
A compliance manager will get in touch with you to collect your documents along with a simple checklist. You need to fill up that checklist and submit along with your documents for verification. Our team of experts will verify the documents provided by you and take the procedure further. The compliance manager dedicated to you will keep you updated on the progress of Company Registration throughout the process.
Name Approval
Once your documents along with Checklist are submitted, we shall proceed with the application of your Digital Signature and subsequently the approval of name for your Private Limited Company. You may suggest up to three names of your choice. Names should be unique and suggestive of the Company’s business. We will proceed with application for name for your Private Limited Company in Part A of SPICe Plus form.
Registration
We will draft the MOA (Memorandum of association) and AOA (Articles of association). We will file the incorporation documents with MCA through in part B of a form called “SPICe Plus (SPICe +)” along with the subscription statement. Usually, MCA approves the forms within 4-5 days once filed and issues Incorporation Certificate with CIN. PAN & TAN are allotted alongside. You may then proceed to open your Company Bank Account.
FAQs On Conversion from Proprietorship to Private Limited
Get answers to all your queries
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How many directors are required in a private limited company?
A private limited company must have a minimum of two Directors and can have up to a maximum of fifteen Directors. But if you are a sole owner, you can incorporate One Person Company also.
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How long will it take to incorporate a Company in India?
It generally takes 8-10 working days to register Private Limited Company in India. The time taken for registration totally depends on submission of relevant documents by the client and speed of Government Approvals. To ensure quick and speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.
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What do you mean by Digital Signature Certificate (DSC)?
The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company. Digital Signature application is to be filed to obtain DSC.
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Can a Foreign National or an NRI be a Director in a Private Limited Company?
Yes, a Foreign National or an NRI can become a Director in a Private Limited Company in India after obtaining Director Identification Number (DIN). However it may be noted that at least one Director on the Board of Directors must be a Resident India.
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Can a Foreign Parent Company incorporate a Subsidiary in India?
Yes, Foreign or holding Companies can incorporate a wholly owned subsidiary in India, as a 100% owned Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.
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In Which Cities do you provide your services?
Ebizfiling.com provides Priavte Limited Company Registration all across India. You can obtain Private Limited Company registration in Ahmedabad, Mumbai, Pune, Bangalore, Chennai, Delhi, Kolkata, Kanpur, Nagpur, Jaipur or any other cities easily with us.
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Still have confusion?
Don’t worry!! Our expert will help you to choose best suitable plan for you. Get in touch with our team to get all your queries resolved. Write us on info@ebizfiling.com or call us @+91 9643 203 209.
