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Propreietor to private and private to proprietor

Ankit Madhogarhia (Pursuing Final) (531 Points)

25 June 2013

Hi Friends,

I had a query regarding the converison process,please help me out to solve the same.

1) procedure to convert a Proprietor Business into a Private limited company and private limited to proprietor Business and

2) In the year of conversiom do we need to file two income tax return i.e one is for Proprietor (for the period ) and other is for Private limited ( for the remaining period)

Thanks in advance.

Regards, Ankit Kumar

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6 Replies

ANU BANSAL ("Love urself the most.........") (2482 Points)
Replied 26 June 2013

Dear Ankit,

For converting a Proprietorship Firm into Company, few legal formalities & compliances needs to be complied with

All the assets & liabilities of the proprietorship firm immediately before the conversion becomes the assets & liabilities of the Company.

There is no capital gain tax and no stamp duty.

There shud be Minimum share capital of Rs. 1lac and Minimum 2 directors if converting into Private Limited Company .

Apply for DIN and get provisional DIN (Director Identification Number) for all the Directors.

DSC (Digital Signature Certificate) for one of the Directors.

The directors and shareholders can be same person.

Step 1

Documents required self attested :-

Identity proof
Address proof

Step 2 : Pre name application search : Application is required to be made in Form -1 for availability of name for the Company. Promoters can suggest 6 names in the order of priority and the application to be submitted to ROC for approval.

If any change in the name application is being proposed by ROC, it should be complied with.

Step 3 : Documents required :-

The MOA/ AOA are required to be drafted

Other forms like form 18, form 32, form 1 and letter of Authority/ PoA is required to be filed with the ROC

Final process

Filing all the above documents with the ROC, follow up with the ROC, making changes to the MOA / AOA/other Incorporation documents as suggested

Upload the forms online
Payment of Registration fees

Collect the Certificate of Incorporation

For more info :

https://www.mycompanyregistration.com/proprietorship-to-private-public-company.html

ANU BANSAL ("Love urself the most.........") (2482 Points)
Replied 26 June 2013

For your 2nd Query .....

Yes ,U need to file two income tax returns for the respective concerns.

Regards,

CA Anu Bansal

Ankit Madhogarhia (Pursuing Final) (531 Points)
Replied 26 June 2013

HI Anu Bansal,

First of all i wanna to thanks you for the wonderful explaination for m,y query ,and giving the suggestion and also links for the same.

I had gone through the same and understand the procedure also for the conversion .

Can u also let me know if one want to convert from private to proprietor business also ....

Thanks

Ankit

ANU BANSAL ("Love urself the most.........") (2482 Points)
Replied 26 June 2013

Am not sure but as per my opinion a private limited company can’t be

converted into proprietorship .

But one may attempt for voluntary dissolution of the company and then

create a new sole tradership ...

CA Shruti kuchhal (CA ) (427 Points)
Replied 26 June 2013

Dear Anu, do we have to file form 2 for allotment of shares at the time of incorporation of company or subscripttion to MOA and AOA will suffice

Thanx in advance

ANU BANSAL ("Love urself the most.........") (2482 Points)
Replied 27 June 2013

Dear Shruti ji,

In case of subscripttion to MOA form 2 is not required to be filed because it is a deemed allotment of shares and subscribers of memorandum are considered as the members and shareholders of the Company from the date of incorporation.

Regards,

CA Anu Bansal