Unlock new growth opportunities for your business by exploring the various options for business conversion in India. Whether it’s converting from a sole proprietorship to a private limited company or transforming your partnership into a limited liability partnership, make informed decisions to propel your business forward.
Expanding a business is an exciting endeavor that opens up new opportunities and markets. In India, a country known for its vast consumer base and thriving business environment, converting your business to a different entity structure can be a strategic move towards growth and success. In this blog, we will explore the various options available for converting your business in India and the benefits they offer.
Under the Companies Act of 2013 in India, a One Person Company (OPC) can be converted into a private limited company, either voluntarily or mandatorily. For voluntary conversion, the OPC must have completed two years from its date of incorporation. In the case of mandatory conversion, the OPC should have a total paid-up capital exceeding Rs. 50 lakh, or its average annual turnover during the previous three financial years should be more than Rs. 2 crore. The conversion procedure must adhere to the provisions specified in Sections 18 and 122 of the Companies Act of 2013, along with the rules outlined in the Companies (Incorporation) Rules of 2014, including Rule 7(4).
A private limited company can be converted into a one person company (OPC), provided it is not a Section-8 company. However, for such a conversion, it is advisable that the total paid-up capital and annual turnover of the private limited company remain significantly less than Rs. 50 lakh and Rs. 2 crore, respectively. The conversion process must comply with the provisions stated in Sections 18 and 122 of the Companies Act of 2013, as well as the rules mentioned in the Companies (Incorporation) Rules of 2014, particularly the sub-rules within Rule 7.
A private limited company can be transformed into a Limited Liability Partnership (LLP) in India, which is governed by the LLP Act of 2008 and the LLP Rules of 2009. LLPs offer several advantages over private limited companies, especially when the paid-up capital, membership, and annual turnover are expected to remain limited. Only a minimum of two designated partners is required to register an LLP in India. LLPs enjoy certain relaxations and exemptions related to statutory compliances, accounts auditing, taxation, and more compared to private limited companies.
A business operating in any form of a company can be converted into a Limited Liability Partnership (LLP) with the support of the Ministry of Corporate Affairs in India. LLPs are registered and regulated according to the provisions and rules outlined in the Indian LLP Act of 2008 and the LLP Rules of 2009. LLPs offer exclusive benefits and advantages over other types of companies incorporated under the Companies Act of 2013, such as relaxed statutory compliances, auditing of accounts, taxation, and more.
A sole proprietorship firm can be converted into a private limited company to enjoy various benefits provided by the Companies Act of 2013. Private limited companies in India offer advantages such as nationwide legal recognition, perpetual existence, limited liability, government facilities and subsidies, increased paid-up share capital and membership, and easier compliance with GST and the Companies Act of 2013.
Introduced under the Companies Act of 2013, a One Person Company (OPC) provides several benefits over the sole proprietorship business form. OPCs enjoy universal legal recognition and protection, limited liability, perpetual existence, government subsidies and relaxations, flexibility in growing paid-up capital and membership, and simplified compliance with GST and other relevant laws. To form and incorporate an OPC, a minimum of one director and one shareholder is required, who can also be the same person.
Unlock a streamlined process to convert company type with Tax Mother. Our proficient experts specialize in seamlessly guiding businesses through the intricate journey of changing their company structure. Whether you’re transitioning from a sole proprietorship, altering your LLP status, or reshaping a private limited company, our dedicated team ensures meticulous management of all legal and regulatory aspects. Trust Tax Mother to be your dependable partner in this transformative endeavor, making the convert company type process efficient and hassle-free.
