Conversion of Partnership into LLP: An Ultimate Guide
Overview:
Would you like to convert your partnership firm into a Limited Liability Partnership (LLP)? The Conversion of partnership into LLP offers several benefits, including limited liability protection and ease of business operation. With expert assistance from Startup Portal Business Services, you can navigate the conversion process smoothly. This guide will take you through the process, from understanding LLPs to the necessary documents and legal requirements.
What is a Limited Liability Partnership?
A Limited Liability Partnership is a hybrid business structure that combines the benefits of both a partnership firm and a private limited company. In a traditional partnership firm, partners have unlimited liability, whereas an LLP provides limited liability protection to its partners while allowing operational flexibility.
LLP Long Form: Limited Liability Partnership
Why Choose an LLP over a Partnership Firm? LLP vs Partnership Firm:
Difference Between Partnership Firm and LLP:
Requirements for Partnership to LLP Conversion:
- For the conversion of partnership into LLP, the following conditions must be fulfilled:
- Approval should be taken from all partners to convert the firm into LLP.
- There must be no existing agreements that restrict conversion.
- Should fulfill Section 55 of the Limited Liability Partnership Act, 2008.
- LLP must have at least two designated partners, one of whom should be an Indian resident.
Conversion Process of a Business Firm from a Partnership to an LLP:
Step 1: Obtain a Digital Signature Certificate (DSC)
The designated partners must obtain DSC for electronic filing of forms.
Step 2: Apply for Director Identification Number (DIN)
Partners should apply for DIN/DPIN via the MCA portal.
Step 3: Name Reservation for LLP
Submit the RUN-LLP form on the MCA portal to reserve the LLP name.
Step 4: File Incorporation Documents
Submit FiLLiP and Form 17 (Form for Incorporation of LLP) along with relevant documents.
Step 5: Obtain a Certificate of Incorporation
The Ministry of Corporate Affairs, on the acceptance of papers, issues the Certificate of Incorporation.
Step 6: Draft LLP Agreement
Develop a legally binding LLP agreement that defines the roles and responsibilities and decides the profit-sharing ratios.
Step 7: Apply/Update for PAN & TAN
Apply/Update for PAN and TAN for your LLP after incorporation.
Step 8: Intimate to Relevant Authorities
Inform tax authorities, banks, and vendors about conversion.
Documents Required for Partnership Firm to LLP Conversion:
- PAN card of the partnership firm and partners.
- Partnership deed and consent of partners.
- Address proof of business premises.
- NOC from creditors and landlords if applicable.
- Statement of Assets and Liabilities.
- Proof of DSC and DIN/DPIN of designated partners.
- Latest ITR copy if available
Advantages of Incorporation of Partner Firm into LLP:
- Limited Liability Protection – There is protection afforded to the assets of the individual partners.
- It is a legal entity and exists independently; and
- Less paperwork burden than other private limited company forms;
- Even if the partners of the firm withdraw, it could continue with seamless succession.
- They are exempted from DDT, and the ownership can also be transferred or sold without the restrictions posed by other various modes.
- The conversion of a partnership firm into an LLP is a strategic decision that ensures business continuity and legal protection. Startup Portal Business Services specializes in seamless partnership to LLP conversion, ensuring compliance with all regulations.
Conclusion:
The conversion of a partnership firm into an LLP is a structured process that enhances business scalability, credibility, and liability protection. Whether you are looking for conversion of a firm into an LLP, conversion of a firm into a company, or conversion of a partnership firm into a limited company, proper documentation, and legal compliance are the keys.
For expert guidance on LLP vs Partnership Firm, Call Startup Portal Business Services today! Our team ensures hassle-free business structuring and provides end-to-end assistance in legal and compliance matters.