Many business firms are converting their regular partnership into a limited liability partnership (LLP) as it offers many advantages and is also convenient to run a business. In LLP, all the partners have limited liabilities. LLP helps your expertise in your field and also works in a much more efficient manner.
Why change to LLP?
LLP offers much more benefits than a normal partnership does. It also helps you operate the business in a better way.
- • In the case of debt, no personal belongings would be taken away. Only the money borrowed for the start of this business will be lost.
- • LLP offers a distinct legal entity which means LLP and the other partners are separate from each other.
- • No minimum capital contribution is required
- • Any business firm can avail the benefits of LLP.
- • LLP can be formed easily and with a very low capital also.
- • In case of a normal partnership, deed or act of any one partner would affect all other partners. But in case of LLP, no partner or member is liable for the action of any one member or partner.
- • Each partner has limited liability on the basis of his shares.
- • The government of India offers much flexibility to the partnership formed by LLP. A normal partnership usually faces many restrictions on the other hand, LLP is free to operate.
Procedure for conversion of a partnership to an LLP –
- • The foremost thing is to get your digital signatures done. Digital signatures of all the members are required to convert a partnership into an LLP.
- • All the members or directors of an LLP are given DIN. It is a unique number given and is required in LLP partnership.
- • After the DIN number is allotted, the ministry of corporate affairs is filed an application for the issue of the name to your LLP. You must register your LLP name first, and then the other formalities are to be done.
- • LLP form 17 – once the name is patent for your organization or firm, you must fill the form number 17 for the conversion of a partnership to LLP.
- • Along with the form, the following documents are required –
- Approval for the conversion to LLP by all partners.
- The information about assets and liabilities of your business. The information mentioned must be true and certified.
- A copy of the recent income tax return
- All documents should be approved by the concerned authority
- Also get a no objection certificate or clearance certificate from the tax authority
- Creditors must also give their consent for the conversion
LLP form 17 has to be digitally signed, verified and then submitted.
- • Form number 2 and 3 is also to be filled and submitted along with LLP form 17. Address proof, consent sheet, details of the company and approval from the respective authority is required along with these documents.
- • On successful conversion, a certificate is issued which must be kept for future reference.
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