How To Convert A Partnership Into An LLP Online?
Converting your business from partnerships into an LLP is better because your business will have limited liability for partners, perpetual existence, unlimited partners, and better access to credit and potential for growth. We help you in conversion of partnership firm into LLP in 3 simple steps –
Can a Partnership Be Converted into LLP - Overview
In comparison to a standard partnership, a limited liability partnership (LLP) can be shown to be a far better business structure. Personal liabilities have an impact on partnerships, and LLPs do away with the Indian Partnership Act of 1932's overbearing requirements. In addition, there are tax advantages, no audit obligations below a specific capital threshold, no partner cap, and no capital contribution restrictions. Read through to know more about conversion of firm into LLP.
Conditions For Conversion of Partnership Firm into LLP
- According to Section 55 of the Limited Liability Partnership Act of 2008 read with Schedule II of the Act, a partnership can partnership be converted into llp.
- There cannot be any new partners or for existing partners to stop being partners during the application process since all partners of the firm must be partners of the LLP.
- Before submitting such an application, at least two partners must have DPINs and all Partners must possess a current Digital Signature Certificate (DSC).
- The Partnership Act of 1932 requires that the partnership entity being converted be registered.
- The approval of all partners is required.
- The partners of the LLP must be the same as those of the partnership firm.
- After the conversion is finished, any partner who wants to leave the LLP can do so.
- All Designated Partners must receive a Director Identification Number (DIN) or Designated Partner Identification Number (DPIN).
Key Differences Between a Partnership and an LLP
Here is a table that explains the key differences between a partnership and an LLP:
|Separate Legal Entity
|Unlimited. Personal assets of the partners are also liable.
|Limited to the extent of their capital contribution.
|Books of Accounts
|Should be prepared according to the provisions of the LLP Act.
|Number of Members
|Maximum 20. In the case of a banking business, the maximum number is 10.
|No limit on the maximum number of partners.
|Digital Signature Certificate (DSC)
|No such requirement.
|All designated partners of the LLP should have a Digital Signature which is a prerequisite for e-filing.
Benefits of a Limited Liability Partnership
There are numerous benefits to LLP which will give clarity on why conversion of partnership firm into LLP benefits the individual:
Separate Legal Entity:
- An LLP is a separate legal entity from its partners. Each partner can sue the other in case a situation arises.
- It has an uninterrupted existence that follows perpetual succession, i.e, the partners might leave, but the business will remain. A term of dissolution has to be mutually agreed upon by the firm, to dissolve.
Transferring the ownership of LLP is simple. A person can be quickly inducted in as a designated partner, and the ownership will switch to them.
Suitable For Small Business:
- LLPs with a capital of less than 25 lakhs and turnover less than 40 lakhs per year, do not require any formal audits. It makes registering as LLP beneficial for small businesses and startups.
- An LLP can own or acquire property because it is recognized as a juristic person. Partners of an LLP cannot claim the property as theirs.
No Owner /Manager Distinction:
An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, venture capitalists do not invest in the LLP structure.
Procedure for Conversion of Firm into LLP
Here is the process to register LLP in India. Vakilsearch provides a seamless and hassle-free process and one can check here to know the quick and detailed process to register an LLP.
Step 1: Obtain Digital Signature Certificate (DSC)
Step 2: Apply for Director Identification Number (DIN)
Step 3: Name Approval
Step 4: Incorporation of LLP
Step 5: File Limited Liability Partnership (LLP) Agreement
FAQs on Conversion of Partnership Firm into LLP
- Get digital signatures of all partners
- Apply for DIN for all the partners
- Submit the application with RUN-LLP Form on the MCA website
- Submit an application by filling out the form Fillip for the conversion
- Register LLP agreement with the MCA website
- Obtain a Certificate of Incorporation for your LLP.
No! registered and unregistered Partnership Firms can be converted into LLP.
The statement of Account and Solvency from the foreign LLP should be submitted on Form 8. After the first six months of the fiscal year have ended, it must be completed within 30 days. The amount due is ₹ 1000.
Documents for an LLP Registration
When one plan to convert partnership to LLP, there are a few documents one must carry, here is the list:
To Be Submitted By Partners
- Scanned copy of PAN Card or passport (Foreign Nationals & NRIs)
- Scanned copy of Aadhar Card/ Voter's ID/Passport/Driver's License
- Scanned copy of latest bank statement/telephone/mobile bill or electricity/gas bill
- Scanned passport-sized photograph Specimen signature (blank document with signature [partners only])
- Note: Any one of the partners must self-attest the first three documents. In the case of foreign nationals and NRIs, all the documents must be notarized (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
For Registered Office
- Scanned copy of the latest bank statement/telephone/mobile bill, or electricity or gas Bill
- Scanned copy of the notarised rental agreement in English
- Scanned copy of No-objection certificate from the property owner
- Scanned copy of sale deed/property deed in English (in case of owned property)
With Cadeskindia registering an LLP is one of the easiest processes in India. We make the entire compliance procedure simple and provide our best efforts to complete the process as early as possible. The Ministry of Corporate Affairs comes up with updates to the LLP process and Cadeskindia takes care of them for you.
- DSC for one director and DIN for up to three directors
- Drafting of MoA & AoA
- Registration fees and stamp duty
- Company Incorporation Certificate
We also provide assistance with:
- Free consultation, followed by subsequent meetings to clear every concern you may face.
- Complete support on opening a current bank account
- Comprehensive and on-time updates on ROC compliances.
- Online accounting software valid for one year.
- A master file that contains all the documents needed to file the incorporation.
- A dedicated service manager is present at all times.
- Being a separate legal entity from the existing partnership firm, LLP will have its own pan card, and a new/separate GST Registration on the name of LLP.
- You will also get a zero balance current account!