A limited liability company is a separate legal person and therefore has a permanent succession. Unlike a sole proprietorship, it is not affected by the death or other exit of a member. It continues to exist, regardless of changes in membership. The transformation of a sole proprietorship into a limited liability company that becomes a separate legal entity, which reduces the risk of liability, does not affect personal assets, except in cases of fraud. The Ministry has introduced a new “RUN” (Reserve Unique Name) form for the registration of company names on its portal. In the “RUN” section, the applicant can submit an application by adding 2 different names with its meaning. Names must be clear and in accordance with the rules. 7. Other facilities for this transformation would be as follows; The debts of a sole proprietorship are actually debts of each owner and are not transferable to a new owner. If the business has debts that are not fully paid before the transfer, discuss with the creditor the new owner`s ability to assume the debt before agreeing to the sale or transfer.
There is no such provision in the Companies Act 2013 to convert sole proprietorships into a limited liability company or to assume the sole proprietorship through a limited liability company. You run your owning company, which is not subject to any law. If you want to file an income tax return for a sole proprietorship and grow your business, it is good to recommend that you convert to a limited liability company. Although there is no specific provision in the Companies Act, 1956 and Companies Act 2013 for the conversion of Proprietorship Company into a Private Limited Company, the owner company is taken over by a new Private Limited Company. You can follow the procedure described below for the conversion of sole proprietorships to Pvt. Ltd. If a business grows, the requirements of the business and the disadvantages of an owner business could force an entrepreneur to begin the process of transforming the property into a limited liability company. A limited liability company offers considerable advantages over the form of ownership of the business, including the limited liability company, the ability to attract equity, sustainability and more.
In this article we deal with the requirements and procedure for transforming the property into a limited liability company. Any person of Indian or non-resident origin has the right to set up a business. The procedure for the conversion of sole proprietorships into a limited liability company would be substantially the same as the procedure for setting up a new company. To bring your belongings to a limited liability company, contact “Registration Arena” at [email protected] or visit www.registrationarena.com/ name reservation can be made via “RUN”; It is an easy and easy-to-use web service to reserve a name for a new business. To turn a business into a limited liability company, please contact an IndiaFilings consultant at [email protected] · All assets and liabilities of the ownership group alone that relate to the transaction immediately prior to the succession become assets and liabilities of the business; 1. The limited liability company must include the purpose of taking over the sole proprietorship as one of its main elements in the partnership agreement. If it does not contain the same thing in its object, the MoA must be modified to insert the object. 9. The parties shall be the first directors of the company and the board of directors shall be constituted after the registration of the company within the meaning of the articles of association. .