Hi...want to know the procedure for converting a sole proprietorship into partnership.
Can the assets of sole proprietor be converted into assets of the partnership firm including land, buildings, stock in trade etc
What the formalities, any rules and regulations, what are tax obligations etc.
There is no legal procedure for converting a proprietorship firm to a partnership firm because the treatment of proprietorship firm and the proprietor is the same. Any property of the proprietorship firm is the property of the proprietor. Suppose the proprietor has obtained any license to conduct the business of the proprietorship firm then he has to surrender the same. Following which he can form a partnership with another person and contribute the assets as they are treated as the property of the proprietor. The propreitor can contribute whatever amount or property he wishes towards the capital of the partnership firm
| Originally posted by :Divya | ||
| " | There is no legal procedure for converting a proprietorship firm to a partnership firm because the treatment of proprietorship firm and the proprietor is the same. Any property of the proprietorship firm is the property of the proprietor. Suppose the proprietor has obtained any license to conduct the business of the proprietorship firm then he has to surrender the same. Following which he can form a partnership with another person and contribute the assets as they are treated as the property of the proprietor. The propreitor can contribute whatever amount or property he wishes towards the capital of the partnership firm | " |
Divya, thanks for your reply. Suppose if the proprietor contributes property towards his share of capital, then will there be any capital gains tax / any other tax. And will the partnership deed be sufficient proof to establish transfer of property from proprietor to partnership firm. Also should the value of property has to be done by any professional valuer or the value can be agreed upon by the partners.
riginally posted by :Divya " There is no legal procedure for converting a proprietorship firm to a partnership firm because the treatment of proprietorship firm and the proprietor is the same. Any property of the proprietorship firm is the property of the proprietor. Suppose the proprietor has obtained any license to conduct the business of the proprietorship firm then he has to surrender the same. Following which he can form a partnership with another person and contribute the assets as they are treated as the property of the proprietor. The propreitor can contribute whatever amount or property he wishes towards the capital of the partnership firm " Divya, thanks for your reply.
Suppose if the proprietor contributes property towards his share of capital, then will there be any capital gains tax / any other tax. And will the partnership deed be sufficient proof to establish transfer of property from proprietor to partnership firm. Also should the value of property has to be done by any professional valuer or the value can be agreed upon by the partners.
Please if any one can share their valuable reply to the aforesaid question of Ravi Kiran & the same being mine
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