Proprietorship to Partnership

Convert Proprietorship to Partnership

A large number of businesses start as Proprietorship firms with a single owner. As the business picks up, most businesses need partners who can bring value to the business. This is at the expansion stage. Business is all about growth. Depending on the plans for growth and the comfort, you can choose any business structure that works for you. The simplest and easiest would be to graduate to a partnership firm This allows you to add one or more partners and move your existing business to a partnership firm structure. There are some procedures to follow for this. EOB is here to assist you with the transition. Once converted, all your assets, liabilities, rights and IP will be pass on to the partnership firm. All changes will however be based on consent from the partners and will be defined in the agreement.

This structure is far more beneficial than running a business as a Sole Proprietor. Partnerships can benefit from companionship, mutual support and a shared common goal. The roles and responsibilities can be predefined in the Partnership Deed.

The partners in a Partnership firm can mutually decide how to operate the business and how the responsibilities are defined. The partnership Deed can be changed from time to time to incorporate any changes in the way it is managed. There is no restriction on the partners as long as their roles are defined and covered under the signed agreement.

As a partnership firm, the goals, objectives and tenure can be defined at the time of preparing the Partnership Deed. If the firm is being registered to complete a specific task or project, the same can be spelt out in the agreement and on completion of the set goal, the partnership can be dissolved.

In a partnership firm, the partners involved earn various types of returns which includes profits from the business and returns on the capital employed. The working partner can also receive remuneration in addition to the return on capital invested. Every aspect can be clearly defined in the agreement.

Each partner in a partnership firm can bring their own knowledge, skills, experience and contacts to the business, potentially giving it a better chance of success than the partners trading individually. Partners can share out tasks, with each specialising in areas they’re best at and enjoy most. E.g., Finances can be handled by one partner while business development is handled by the other.

In a business partnership, the partners both own and control the business. Defining roles and responsibilities of partners helps to stay focussed and build the business faster. The partners can thus control the business through combined ownership.

As the business expands, this structure allows existing partners to bring in new partners who can contribute in the form of capital and benefit from the profits of the business.

This structure allows the existing partners to add new partners based on their contribution to the business. It can also help retain talent by giving them an incentive to become future partners based on performance. Everything can be defined explicitly.

• Gather basic information of the business
• Collect required documents
• Partnership Deed drafting
• Review and confirmation from Partners
• Stamp Duty payment on agreement & Notarization of Partnership Deed
• File application for allotment of PAN and TAN
• Registration of Partnership Deed
• Certificate of Registration from Registrar of Firms (RoF)