Conversin of Proprietorship V/S Firm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 March 2010 one of my friend Runing Proprietorship business. He want to convert into partnership firm alog with relatives partnes. Total amount investment in propreitorship business is around 10 lakhs in that 5 lakhs invested by relatives. Relatives are given amount to run the buiness as proprietorship We have not shown any loan in the business, All machiney and vechiles name in the proprietor name. How to convert all into firm, How to introuduce capital to each partners---ete

Amit Bajaj

Amit Bajaj (Expert)
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22 March 2010 Its a tricky situation.You should have shown the loan of the relatives in the books of the properitorship concern in which case it would have been much easier to convert the relatives loan into the capital of the relative (who is to be added as partner) while converting the properitorship into partnership by adding a clause to that effect.

However you can still convert the properitorship concern into partnership by adding such relative as partner by showing some little extra capital or even with NIL capital of such relative. The capital of the properitor will be the same as is existing in his name in the properitorship business

The requisite clauses can be added to the partnership deed as is suitable and convenient to the facts of your case. You can write that the additional capital shall be introduced from time to time by the partners in the firm.

CA Ashok Kumar Sahu

CA Ashok Kumar Sahu (Expert)
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22 March 2010 agreed

Querist : Anonymous

Querist : Anonymous (Querist)

27 March 2010 In the propeitory business Having vehicle Loan for Amt of Rs 6,85,000/- How to convert all loan into partnership firm.

Amit Bajaj

Amit Bajaj (Expert)
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27 March 2010 when properitory business is converted to partnership business add a clause to the effect that the liabilities and assets of the properitory business will be that of partnership business.

Moreover if the vehicle is to be brought as an asset in the firm the liability attached to it in the form of loan will also follow such vehicle.

Querist : Anonymous

Querist : Anonymous (Querist)

31 March 2010 I NEED A FORMATE OF COVERSION OF PROPERITORY TO PARTNERSHIP DEED. What r da cluse i have to mention please send me details. Total assets having in proprietorship around 11 lakhas as on 31.03.2009.

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