Conversion of Pvt Ltd to LLP

LLPs are the preferred form of business because they are an alternative corporate business vehicle that provides the benefits of limited liability of a company while also allowing its members the flexibility to organize their internal management on the basis of a mutually agreed-upon agreement, as in a partnership firm.

Overview

LLP is a more straightforward but also provide a corporate company structure that combines the best aspects of both a company and a partnership.

Under the following conditions, a private limited company can be transformed into an LLP:

At the time of application, the firm had no security interest in its assets.
The only people who will be partners in the LLP are the company's shareholders.
All the creditors of the company must also agree with the conversion.

Because a company's conversion to an LLP is not considered a transfer under the IT Act, there will be no capital gain tax.

Benefits
Checklist/Requirements
How to Register/Process
Key Deliverables

Benefits of Conversion of Pvt Ltd to LLP

In comparison to a company, an LLP will have more freedom.
In comparison to a company, an LLP will have less compliance obligations.
If the LLP's annual turnover is less than Rs. 40 lakhs and the capital investment is less than Rs. 25 lakhs, the LLP's accounts do not need to be audited.
Dividends received from the company are taxed at the appropriate slab rate in the hands of shareholders. While the taxes structure for LLP is more straightforward. Only income tax applies to LLPs. The LLP does not have a dividend distribution policy.
Partners in an LLP can withdraw their capital at any moment by submitting a simple letter. Withdrawing capital from an LLP has no tax effects.

Checklist/Requirements

Consent of each of the shareholder of the company for conversion of the firm into LLP in the given format.
Incorporation document in Form Fillip.
Form 3- Form of application and declaration of incorporation of an LLP.
Clearance/no-objection certificate from tax authorities.
Statement of assets and liabilities from the company.
List of all the creditors along with their consent.
Approval from any other country.
Authorization to make a declaration.
Optional attachments, if any.

Process of Conversion of Pvt Ltd to LLP

Step 1: Hold a board meeting and pass a board resolution for conversion of Private limited company to LLP

Step 2: Application for Name Availability for the LLP

Step 3: File e-Form and then fill it with ROC along with the documents mentioned above

Step 4: Filing of Application for Conversion into LLP

Step 5: Get Certificate of Incorporation as LLP from ROC

Step 6: Filing of E-Form-3

Key Deliverables

Incorporation certificate
LLP Deed

Why Choose Us

Entrepreneur Friendly

We make the process so easy and fast that you will not even feel the headache of all the paperwork, and our professionals will provide you all the promised deliverable within a given span of time.

Experienced Professionals

All our professionals are qualified and specialized in that particular work. Making sure no mistakes are done at the time of filings with the authorities so that company won’t have to pay any penalties due to mistakes.

One Stop for All Your Requirements

We support you throughout the journey of your business, from the incorporation, Accounting and taxation support, Secretarial compliance support, and Legal support.

Cost-Effective

We believe that cost plays a vital role in any company’s growth stage, that’s why we do not surprise our clients with hidden charges, you pay what you see in the initial proposal.

Frequently Asked Questions

What are the demerits of converting Private Limited Company to Limited Liability Partnership?

Inability to Have Equity Investment
An LLP does not have the concept of equity or shareholding like a company. Hence, angel investors, HNIs, venture capital and private equity funds cannot invest in an LLP as shareholders. Thus, most LLPs would have to rely on funding from promoters and debt funding.
Higher Income Tax Rate
The income tax rate for a company with a turnover of upto Rs.250 crores is 25%. (Further reduced in 2019 for new companies involved in manufacturing). However, LLPs are taxed at a 30% rate irrespective of the turnover.

Do all the directors and shareholders of a Private Limited Company need to be present during the conversion?

Yes

Do the directors' duties differ from that of a partner?

Directors duties are governed by Companies Act and Duties of Partners are governed by LLP Act.

Excise & Customs