The main reason for converting a proprietorship to a Private Limited Company is to enjoy the benefits of limited liability protection, improved credibility and reputation, easier capital raising, and the ability to transfer ownership more easily, as well as to take advantage of potentially better tax benefits and a perpetual existence.
The business must have been operating for a minimum period of time, usually at least one year, to be eligible for conversion.
The proprietorship must have a clean legal record and must not be involved in any legal proceedings or disputes.
The proprietorship must have a well-defined business structure, including a clear business plan and financial statements.
The business must have sufficient capital to support the conversion process and the ongoing operations of the Private Limited Company.
The business must have at least two shareholders who are willing to become the directors of the new company.
The proprietorship must be in compliance with all relevant statutory requirements, such as registering with the Registrar of Companies and obtaining a PAN and TAN.
