Partnership to LLP Conversion Service
Starting from ₹15,000 + GST
Table Of Content
Partnership to LLP Conversion
Converting a partnership firm into a Limited Liability Partnership (LLP) is becoming an increasingly popular choice for small and medium-sized businesses. This transition offers enhanced liability protection, operational flexibility, and a more structured legal framework, making it a strategic move for sustainable growth.
Unlike traditional partnerships, an LLP provides limited liability to its partners, safeguarding personal assets from business obligations. It also retains the flexibility of a partnership while benefiting from legal recognition and credibility. Additionally, LLPs enjoy certain tax advantages and fewer compliance requirements than private limited companies, positioning them as an attractive option for evolving businesses.
Benefits of Converting a Partnership Firm to an LLP
Eligibility for Conversion
Process of Converting a Partnership Firm to an LLP
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Step 8
Step 9
Step 10
Step 11
Step 12
Step 13
Documents Required
FAQs
What is the cost of conversion?
The cost of converting a partnership into an LLP typically includes various components such as:
- Fees for obtaining Digital Signature Certificates (DSC) and Director Identification Numbers (DIN).
- Professional fees for drafting documents like the LLP Agreement and filing forms with the Ministry of Corporate Affairs (MCA).
- Government filing fees for forms such as RUN-LLP, Form 17, and Form FiLLiP. On average, the total cost can range between ₹5,000 and ₹15,000, depending on the professional charges and additional requirements specific to your firm.
Do all partners need to consent to the conversion?
Yes, unanimous consent from all partners is a legal requirement for conversion. This ensures that every partner agrees to the transition from a partnership to an LLP, as their roles, rights, and obligations will be affected. The mutual agreement among partners is documented and submitted during the conversion process to demonstrate compliance with this requirement.
Can foreign nationals be partners in an LLP?
Yes, foreign nationals can become designated partners in an LLP. However, they must comply with guidelines under the Foreign Exchange Management Act (FEMA) and obtain approval from the Reserve Bank of India (RBI), if required. Additionally, at least one designated partner must be an Indian resident, and foreign partners need to obtain a valid Digital Signature Certificate (DSC) and Director Identification Number (DIN).
Is there a minimum capital requirement for an LLP?
No, unlike private limited companies, LLPs do not have a mandatory minimum capital requirement. Contributions from partners can be made in various forms, including cash, assets, or services. This flexibility in capital contribution makes LLPs an attractive option for businesses that wish to operate with limited financial resources initially.
Does the PAN change after conversion?
Yes, the LLP will require a new Permanent Account Number (PAN). This is because the LLP is recognized as a separate legal entity, distinct from the partnership firm. You must apply for a fresh PAN for the LLP after the Certificate of Incorporation is issued by the MCA. The old PAN associated with the partnership firm will no longer be valid for the LLP.
What happens to the firm’s assets during conversion?
All assets and liabilities of the partnership firm are automatically transferred to the LLP upon conversion. This includes physical assets, financial instruments, contracts, and ongoing obligations. Since an LLP is considered a continuation of the existing business, the transition is seamless, and no separate transfer deeds are required for the assets. However, it’s crucial to ensure that creditors and stakeholders are informed about the change to avoid any disruptions.
How long does the conversion process take?
The conversion process generally takes 2-4 weeks. The timeline depends on several factors, including:
- The readiness and accuracy of the required documents.
- The time taken to obtain approvals for DSC and DIN.
- MCA’s processing time for the submitted forms.
Ensuring all documents are complete and correct can significantly speed up the process.
Are LLPs required to file annual returns?
Yes, LLPs are required to file:
- Form 11 (Annual Return): A summary of the management affairs, to be filed within 60 days of the end of the financial year.
- Form 8 (Statement of Accounts and Solvency): A declaration of financial solvency, to be filed within 30 days of the end of six months of the financial year.
These filings are mandatory to ensure transparency and compliance with the Registrar of Companies (ROC). Failure to file these returns can result in penalties and legal complications.
Can LLPs issue equity shares?
No, LLPs cannot issue equity shares as they are not structured like companies. The concept of share capital does not exist in an LLP. Instead, partners contribute capital in agreed-upon forms (cash, assets, or expertise), and profits are distributed according to the LLP Agreement. This makes LLPs more suitable for businesses not requiring external equity investment.
Is GST registration required for an LLP?
GST registration is mandatory for an LLP if its turnover exceeds the threshold limit specified under GST law, which is ₹20 lakh for most businesses and ₹10 lakh for businesses in special category states. Even if turnover is below the threshold, registration may still be required for certain activities such as interstate supply or e-commerce operations. GST registration allows the LLP to claim input tax credits and comply with tax regulations.