Benefits of Conversion of a Firm Into A Pvt Ltd Co.,

Point No. 1

In case of a firm, the remuneration paid to the partners is allowable to a certain extent only. But in case of a private company, the remuneration paid to directors has no cap under Income Tax Act. So if the company is a closely held company then rather than dividend, directors remuneration can be paid. This is just a tax aspect.

There are various other benefits like separate legal identity, limited liability of members (as against unlimited liability in partnership firm), etc.

Point No. 2

In case of conversion into a company, the firm can revaluate its assets.

Regards,