Why Convert Partnership Company to LLP?
A Limited Liability Partnership (LLP) may prove to be a much superior business structure than a regular partnership. LLP has minimal compliances, tax benefits, limited liability, separate legal entity, no audit requirements below a certain capital, no cap with regard to the number of partners, etc.Nowadays partnership firms are being converted into a Limited Liability Partnership (LLP). LLP offers a bunch of great features such as limited liability protection, transferability, unlimited partners, survivability, etc., making LLP structure more attractive than a partnership firm. The list of other benefits is as below.
a) Private assets remain secured in LLP
b) It’s easy for LLP to raise funds
c) Great tax advantages as compared to a partnership
d) No minimum capital requirement
Conversion of Partnership into LLP
The first thing you need to do while the conversion of a partnership into an LLP is to get a DSC (Digital Signature Certificate). All the partners will require a digital signature.Then, obtain a DPIN (Designated Partner Identification Number). It is again mandatory for at least two partners in order to proceed with the conversion. It is a one-time number. There is no renewal or anything associated.
Next, apply for name approval. It is one tricky part. The name should be selected carefully. Limited Liability Partnership will be used at the end of the company’s name.
Finally, file LLP Form 17, LLP Form 2 and LLP form 3 for the conversion. Certain documents are required along with the form. Documents include:
- Address proof of registered office,
- Approval by the regulatory authority,
- Details of the partnership (including details of partners and directors)
- Consent of all the partners,
- Copy of the latest income tax return (can be acknowledgment),
- No Objection Certificate from tax authorities,
- List of creditors and their consent, and
- List of certified liabilities and assets.
After the successful filing of all the documents along with prescribed fees, verification will take place. After this, a certificate will be issued to you. Hence, completing the conversion of your partnership into a Limited Liability Partnership successfully.
Requirements & Benefits of Conversion
Benefits
An LLP offers a bunch of great features such as limited liability protection, transferability, unlimited partners, survivability, etc., making LLP structure more striking than a partnership firm- Private assets remain secured in an LLP
- It’s easy for an LLP to raise funds
- Great tax advantages as compared to the partnership
- No minimum capital requirement
Requirements for Conversion
Partners of the partnership firm will remain the partners in new LLP, and those who do not wish to continue to be the partner in LLP should retire- New partners who want to add themselves in LLP, should be added after the incorporation of LLP
- All the designated partners should be updated with their income tax returns
- All designated partners must apply for DSC
- All designated partners must apply for DIN or DPIN
- All designated partners must make contributions
- All creditors must give their consent for conversion
We, at Enterslice, can help you in the whole conversion process and make it much easier for you.
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