SOLE PROPRIETORSHIP TO PRIVATE LIMITED COMPANY
A sole proprietorship is a type of business in which only a single individual is involved and no partner is required. It is like running a business at a very low level. There are not many legal formalities done to become a sole proprietor. A sole proprietorship is preferred by many entrepreneurs due to its low compliance requirement. But as soon as you gather success and earn good, it becomes a necessity to separate the company’s bank account from your personal account.
Many people prefer to convert the sole proprietorship into a private limited company after gaining a certain level of success in their field. This requires an agreement for the conversion of same. This gets you a fresh registerertration for running your business.
Advantages of converting sole proprietorship to a private limited company –
- Liabilities - There will be limited liabilities
- Separate legal entity - There will a legal distinction between your business and you
- Capital - Investors can approach easily and you can gather the funds quickly at the time of needs.
- Limited liabilities - The Company will be held responsible in case of loss not you
- Tax and other government benefits - You can take advantage of the various policies offered by the government regularly to make your business grow
Process for the conversion of a sole proprietorship to the company –
- A new private limited company is to be formed
- All the assets of your business have to be transferred to the newly formed private limited company
- The sole proprietorship is terminated and the authorities are informed about the respective change. Now you can carry on your business activities on a larger scale with the tag of a private limited company.
How to transfer the assets to the newly formed private limited company?
This is a little difficult process. Your sole proprietorship should be ended within a time period of 2 -3 months from the beginning of your private limited company.
Following things have to be transferred into the new private limited company –
- Assets – already mentioned above those assets are the most important tools. They need to be transferred as soon as possible after the formation of the private limited company. The assets can be transformed into the paid capital for the new company. For the transfer of whole assets without any inconvenience, the debt has to be paid before the transfer. Unless it would cause complications
- financial information – all the bank accounts named earlier on the sole proprietorship is be converted into the name of your recently formed private limited company for further working. Cheque books, credit cards etc. is to be applied again on the name of the company for doing the financial transaction from the new company.
- Permit – the issued license for the business is to be applied again as old won’t work now.
- An experienced team of professionals
- Qualified experts
- Quality services
- Cost-effective prices
Qiklegal can help you convert the sole proprietorship into the company easily and seamlessly. Consult for a professional conversion experience.