How to convert a sole proprietorship firm into a partnership

Conversion is a cumbersome and painful process instead it is easier to incorporate a new private limited company.

Sorry,

By oversight, I replied wrongly. To convert the proprietorship into partnership you will have to enter into a partnership deed and all the assets of the proprietor can be transferred as the capital in the new firm along with any capital introduction by the other two partners.

dear vishal thanks for the input. Is it a cumbersome process really? How much time is wopuld take approximately? winding of the present firm shall be commenced immediately or at later stage? thanks ajit

You have to prepare Partnership Deed and file Form A of Registration of Partnership Firm with the Registrar of Firm. The Form A containes all the procedures and information to be provided from your side.

Ajith,

Conversion of proprietorship into partnership firm doesnot involve much cumbersome process, the maximum time taken would be 3-5 days, including drafting a partnership deed, ascertaining how much capital would be invested by you by way of closing the old proprietorship and transferring the capital into the new firm and registration of the firm. However, since you have not mentioned in your query what is the business, it would be difficult for me to answer since any licenses under different laws like sales tax or service tax etc... would take much longer time.

dear vishal,

the current firm has been registered on one of our partner's father's name. it is a multimedia business. we would be 3 partners in the new partnership fiurm. all the finance in the new firm would be obtained from external sources. presently, the PAN card is on the proprietor's name.

Thanks and regards

 

ajit

dear vishal,

the current firm has been registered on one of our partner's father's name. it is a multimedia business. we would be 3 partners in the new partnership fiurm. all the finance in the new firm would be obtained from external sources. presently, the PAN card is on the proprietor's name.

Thanks and regards

 

ajit

First you register your firm with the existing 3 partners. After completion of the registration, you make an application for change of status in the PAN.

AJITH

AS DESCRIBED BY YOU THE NEW FIRM SHALL BEAR A NEW NAME AND THE STATUS OF THE BUSINESS WILL CHANGE FROM PROPRIETARY TO A PARTNERSHIP FIRM. THE PAN OF THE PROPRIETOR STANDS AS IT IS AND ONLY YOU NEED TO APPLY FOR A NEW PAN CARD IN THE NAME OF THE PARTNERSHIP FIRM.

P.S: Mr ARUL, STATUS OF THE PAN HOLDER DOESNOT HOLD REFER INCOME TAX ACT, THE TERM PERSON HAS VIDE CONNOTATIONS AND INCLUDES ARTIFICIAL LEGAL PERSONS ALSO, THE PAN OF THE STATUS OF THE INDIVIDUAL DOES NOT CHANGE ONCE THE PAN CARD IS ISSUED

P.S: Mr ARUL, STATUS OF THE PAN HOLDER DOESNOT CHANGE REFER INCOME TAX ACT, THE TERM PERSON HAS VIDE CONNOTATIONS AND INCLUDES ARTIFICIAL LEGAL PERSONS ALSO, THE PAN OF THE STATUS OF THE INDIVIDUAL DOES NOT CHANGE ONCE THE PAN CARD IS ISSUED IN HIS INDIVIDUAL CAPACITY

Please note that it is easy to form a partnership. Consult the state stamp act and purchase the stamp paper in the name of any one of the proposed partners. Execute the deed and register it under the Partnership Act 1932 which is highly desirable. You can transfer the capital account in the prop business to the capital of the firm. If it is more than the agreed contribution of capital the excess can be treated as loan which may or may not carry interest. But beware of the implications relating to capital gains under the Income atx act and sales atx under VAT. If the prop concern is having immovable properties then the transfer would require registration under the Registration Act 1908.

sivadas chettoor B.com FCA LL.M

siva208@yahoo.com

Dear Ajit, A Proprietorship concern can be convert into the a partnership on the following basis: 1) Minimum 2 members(partners) to be there to form a partnership; 2) By mutual understandings of the partners a deed as to be prepared as per Indian Partnership Act, 1932; 3) By the mutual consent of the partners the partership can be registered under the Indian Partnership Act, 1932; 4) If your proprietory concern is registered under various act(s) like Sales Tax, Service Tax or other, then concerned forms to be submitted accordingly to change the status of your firm/business thereto. 5) A seperate PAN has be obtained by the Income Tax Department; 6) And accordingly the IT Returns has be to filed. And after conversion to partnership the assets & liabilities of the firm of proprietory concern is trasfered on firm's only.

Dear Mr.A.V.Vishal,

I am new member to Lawyers club India. I am searching in google for the "Conversion from HUF to Proprietorship"

 

I could not able to get any procedure. Hence, Pls. help.

 

My Brother-in-law, want's to Convert His HUF to Proprietorship. Is this Possible..? If so, what is the procedure. ? Pls. explain in detail .. Thanks..!!!

 

Dear Mr.A.V.Vishal,

I am new member to Lawyers club India. I have some queries regarding conversion proprietorship firm into a partnership frim.If the partners do not want to contribute any money during formation of the partnership firm from proprietorship firm, will the partnership still be valid.Only the proprietor invest his proprietorship firm capital in new partnership firm.Please explain in details.Thanks.......