Conversion of Proprietorship firm into LLP
Benefits:
A) Automatic transfer
All the assets and liabilities of the firm immediately before the conversion become the assets and liabilities of the LLP.
B) No Stamp Duty
All movable and immovable properties of the firm automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
C) No Capital Gain Tax
No Capital Gains tax shall be charged on transfer of property from firm to LLP.
D) Continuation of Brand Value
The goodwill of the firm and its brand value is kept intact and continues to enjoy the previous success story with legal recognition.
E) Carry Forward and Set off Losses and Unabsorbed Depreciation
The accumulated loss and unabsorbed depreciation of firm is deemed to be loss/ depreciation of the successor LLP for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor LLP.
Steps involved in formation of a Limited Liability Partnership (LLP):-
Step No. | Steps | Timeframe (Working days) | Processing |
1 | DSC (Digital Signature certificate) | 1 | Documents required
(Self attested): • Address proof
• Identity proof |
2 | DPIN (Designated Partner Identification Number) Approved DPIN is a pre-requisite for incorporation process | 5 | • Apply for DPIN and get a provisional DPIN • Certification/Attestation of Director’s personal details
• Sending the same to the MCA Cell and getting it approved |
3 | Pre- Name Application Search | — | • The Promoters have to provide atleast 6 (Six) names in the order of priority • To make an online search of availability of names as desired by the Promoters |
4 | Application for Name Availability • Filing of Form 1
• 6 names for the proposed Company
• Main Object Clause | 6 | • To draft the Main Object to be pursued by the LLP after incorporation |
5 | Representation before RoC on behalf of Promoters | 1 | • Changes to be made in the Name application, if any, suggested by the RoC. |
6 | Documents required for incorporation of an LLP • LLP Agreement
• Form 2
(Statement by Promoter)
• Form 3
(Information regarding the LLP Agreement)
• Form 4 & Form 9
(Notice of Consent & Appointment of Designated Partners with their personal details)
• Subscription sheet signed by the promoters
• Duly stamped LLP Agreement
• Proof of Address of Registered Office | 2 | • Drafting the LLP Agreement and after getting it vetted by Promoters, sending it for printing • Processing of eForms |
7 | Final Process: • Filing all the above documents with the ROC, follow up with the ROC Making changes in LLP Agreement/ other Incorporation documents as suggested by the ROC | 5 | • Online uploading of e-Forms • Payment of Registration fees
• Issue of Certificate of Incorporation |