What is Proprietorship to Private Ltd Overview
Many business people start their businesses as a Sole Proprietorship due to the low compliance requirements. As the business and the incomes grow, there is a need to separate the bank accounts and the tax filings of the Sole Proprietor and that of the business. To accomplish this separation a possible solution is to convert the Sole Proprietorship into a Private Limited Company.
Process for Proprietorship to Private Ltd
Complete our Simple Form
Obtain DSC and DIN of Directors
Approval of Name and submission of Forms
Certificate of Registration/ Incorporation
Documents Required For Proprietorship to Private Ltd
Benefits Of Proprietorship to Private Ltd
FAQs On Proprietorship to Private Ltd
A modification in the number of shares
While SPICe is an eform, SPICe is an integrated Web form offering 10 services by 3 Central Govt Ministries & Departments.
Application Number refers to a system generated number given to an application for Name reservation Incorporation which is yet to be submitted uploaded by the user.
Yes. However, a fee of INR 1000 becomes payable if applied separately.
Presently ICICI bank has been integrated with SPICe for opening a Bank account.
A Pvt. Ltd. company would need two or more members who shall act for as directors of the said company.
Once a Company is incorporated, it will be active and in existence as long as the annual compliances are met regularly.
Under RUN, the applicant can make application by providing 2 different names with its significance.
The proprietorship must be closed within three months of incorporating of the Private Limited Company.
The assets of proprietorship can be converted into capital for the Private Limited Company, via the making of resolutions and further contracts agreements. Any debt owing to any creditors (including fines penalties) will have to be settled before the transfer of such assets.
All bank accounts used for the sole-proprietorship need to be closed, and a new bank account under the Private Limited Company need to be opened. Naturally, all cheques and bank transfers need to be made in favor of the Private Limited Company henceforth.
Any individual organizationincluding foreigner
A Pvt. Ltd. company would need two or more members who shall act for as directors of the said company. It is a general practice that the shareholders of the company play the role of directors. It does not require any minimum amount to be infused as capital. However, a certain fee must be paid to the Government for issuing a minimum of shares worth ₹ 1 lakh [Authorized Share Capital] during company registration. Also, there is no requirement to show proof of capital invested during the registration process.
Starting a business under the Pvt. Ltd structure is advantageous as it creates trust and credibility. Its easier to get loans, and it helps in attracting more financial institutions, suppliers and potential clients. financial institutions and individuals prefer investing in companies that are reliable and private limited companies offer such a reliability factor, as compared to a structure like a sole proprietorship or general partnership. Therefore if you are looking for expanding or trustworthiness is an important part of business its a very good option
Once a Company is incorporated, it will be active and in existence as long as the annual compliances are met regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of up to 20 years.
The company must hold a Board Meeting at least once in every 3 months. In addition to the Board Meetings, an Annual General Meeting (AGM) must be conducted at least once every year. Fulfillment of Annual Compliance Requirements is a must to maintain the active status of the company.
Ministry has introduced a new form RUN (Reserve Unique Name) for company name registration on its portal. Under RUN, the applicant can make application by providing 2 different names with its significance. The names should be unique and in accordance with the provisions.
All the assets and liabilities of the sole proprietary concern relating to the business are considered to be purchased by the newly formed company. This makes the sole proprietor liable to pay taxes for any capital gains calculated on such transfer. However, there is a provision under section 47(xiv) of the Income Tax Act, which lays down certain conditions for exemption from any capital gains i.e.; if they are transferred immediately before the succession, it becomes the assets and liabilities of the company.
Any person is eligible to be a shareholder while registration or afterwards. A Body Corporate such as company or LLP; and Association of Persons (AOP) such as Society or Trust can also hold shares in a company. Further, a group of persons can jointly hold the share in the company.