Firm to LLP

About Conversion of Firm into LLP

In Indian corporate sector there are a number of firms carrying out different kinds of business activities while providing different as well as same kinds of products and services. Therefore, if you are an entreperneur in India there are several options available to form an organization. However, before you choose one of them you must know details about all of them what falls in your favour and what not. As there are different merits and demerits of each and every type of organization, all you have to do is compare them and make your decision according to the best suited option for your business.

When we speak of different business organisations, partnership is a prominent one among them and its feature of providing unlimited liabilities to the partners of the firm is sort of a demerit. Due to this thing the personal assets that might appear to be precious for an individual partner falls at risk. However, to convert this demerit into a merit one can turn the partnership firm into LLP i.e. limited liability partnership, as the name itself suggests in this type of partnership the personal assets of partners are not at stake.

Procedure for conversion of firm into LLP

If a partnership firm longs to get converted into a LLP, it is important that the firm is registered with Indian Partnership Act, 1932. In order to convert a firm into the LLP the following steps should be followed-

  • Get the digital signature- all the partners of the concerning organization should essentially have their digital signatures, as there are a number of forms that are needed to be filled.
  • DPIN and DIN- usually, all the partners of a normal organization do not have their own DIN ( director identificatiopn number ). It is kind of a unique id Central government issues, it is issued only once but could forever.
  • Approval of the name- after getting the DIN you have to apply for name reservation process for the LLP organization you are longing to form. This have to be done under the guidelines provided by MCA.
  • Form Fillip- In the Limited liability partnership incorporation’s form should be filled properly.
  • Form 3- A very important form that has to be filled to convert an organization into LLP
  • Form 17- the most important form that includes statement as well as application for a company’s conversion into the Limited liability partnership. The declaration is also included in this form.

After all these steps are completed successfully, a certificate is issued by the registrar that states the normal partnership organization is converted into the limited liability partnership.

Documents required for conversion of firm into LLP

There are several documents that are required for conversion of an organization into the LLP, and those may include-

  • The registered office’s address proof
  • Regulatory authority’s approval
  • Partnership details including directors and partners information
  • Mutual consent of each and every partner
  • Reciepts of Income tax returns
  • List of the assets and liabilities that are certified

Along with these documents it is also essential to have The certificate of no objection by the authorities. Once you have done with all the documentation as well as paid the required fees, a verification happens and then the certificate is issued.

Faqs

There are a number of questions that are asked very frequently with respect to the LLP and converting a company into it. Here are some of them-

The answer to this question is no, going according to the section 115JAA’s amendment of the Income Tax Act 1961 in Finance Act from the year 2010
The real value of existing assets in an LLP firm should be mentioned at the time of conversion and it is evaluated according to that.
if we speak of un-absorbed depreciation and accumulated loss of the former organization, they should be taken as depreciation’s allowance or old loss of newly formed LLP as the owners are same.

Thus, now when you are quite aware about the conversion of an organization into the LLP you can opt for creating a business organization with respect to the LLP. It is quite necessary that the partners of the firm should be of sound mind and above the age of 18 along with that it is recommended that you should not be partner with people having criminal records or any kind of insolvency.