How to convert a sole proprietorship firm into a partnership

Project Manager

hi

 

what would be best method to convert a prorietorship firm into a partnership firm. We would be 3 partners.

 

Regards

 

ajit

 
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Advocate

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

 
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Advocate

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.


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Project Manager

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
 
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Legal Consultant & Professor at Law

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.

 
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Advocate

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.

 
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Project Manager

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

 
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Project Manager

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

 
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Legal Consultant & Professor at Law

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.

 
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Advocate

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

 
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