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Conversion of firm into private company.

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(Querist)
28 January 2014 What are the benefits to convert partnership firm into private limited company?
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
28 January 2014 benefits are more qualitative in nature:

1. it provides you with limited liability. However, given that where you borrow moneys from banks/financial institutions personal guarantees of the directors is more or less required, limited liability has limited value to that extent.

2. it provides you with perpetual existence unhindered by change in shareholders. This helps in long term planning.

3. Better acceptance: In many situations company status helps in comparison to non-corporatized structures.

However the above should also been seen in light of the disadvantages, which are:

1. Tax Issues: application of MAT, DDT

2. ROC compliances

3. hard to liquidate
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