A sole proprietorship cannot get all benefits of operation as it grows. So, there will be a need to convert the proprietorship into a private limited company. The conversion can bring in its wake all the benefits of a company like higher capital, limited liability, and so on. Conversion of a proprietorship into a private limited company provides many benefits, but it also brings along the diffusion of power and loss of independence. Therefore the decision must be taken after careful consideration of all the factors involved and see if it genuinely brings about privileges intended.
The following are the steps involved in the conversion of proprietorship to accompany when the above mentioned requirements are met:
The following documents are required for conversion:
The forms to be submitted to the MCA are:
To form a private limited company from a sole proprietorship, the procedure is to first form the private limited company and then take over the sole proprietorship through a Memorandum Of Association (MoA) and transfer all benefits and liabilities to the limited company. So, the following requirements must be taken care of before applying for a certificate of incorporation.
So to summarize, it is as shown below:
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