Conversion of a proprietorship into an LLP

How does a proprietorship become an LLP?

The Second Schedule of the LLP Act, 2008 converts a partnership firm, not a one-owner business. A proprietorship has no partners to carry into an LLP.

The owner incorporates an LLP. The Act requires at least two partners and two designated partners. At least one designated partner must be resident in India.

The proprietor and the LLP then sign an agreement that moves the business assets and liabilities to the LLP. A firm that already has partners uses Form 17 instead of this route.

Who should move a proprietorship into an LLP?

Two plans fit this route:

• An owner who is adding one partner and wants limited liability.
• An owner who will not issue shares.

An owner who will stay alone can incorporate a one person company. An owner who will issue shares should incorporate a private limited company.

Which documents does the move need?

The LLP filing uses two sets of papers.

For each partner

• PAN, identity proof, a photograph and address proof not older than two months
• Consent to act as a partner or designated partner

For the business

• Proof of the registered office and a no-objection from the property owner
• A statement of the proprietorship’s assets and liabilities
• The agreement that transfers the business to the LLP

What are the steps?

Company Suggestion completes the move in four steps.

1. A second partner is named. Both designated partners take digital signatures.
2. FiLLiP incorporates the LLP.
3. The partners sign the LLP agreement, and Form 3 files it within 30 days.
4. The business-transfer agreement is signed, and the LLP opens its bank account.

Related page: Conversion of a partnership firm into an LLP

Frequently asked questions

4 questions cover the rules that decide this registration.