Overview on How to Convert Proprietorship to Private Limited Company
In India, many entrepreneurs initially start their business as a sole proprietorship because of its low compliance requirements. After certain years, the business will boom and the revenues involved will become more.Now, in order to limit the liability and to detach the bank accounts and tax filing of an individual, a sole proprietorship firm will be converted to a private limited company.
By conversion of proprietorship into private limited company under companies act 2013, it becomes a separate legal entity thereby reducing the risk of liability and the personal assets will remain untouched except in case of fraud.The private limited company will be governed under the companies act, 2013, and the shares are held privately not offered to the public. Similarly, the structure of taxation will be unique under income tax act, 1961, and different from the sole proprietorship, which considers the income as individual income.
