How to Convert Proprietorship to Private Limited
Why Convert to a Private Limited Company?
As your business grows, a sole proprietorship might limit your ability to raise capital or protect your personal assets. A Private Limited (Pvt Ltd) company offers:
- Limited Liability: Your personal assets are protected from business debts.
- Better Funding Opportunities: Investors prefer the corporate structure of a Pvt Ltd company.
- Perpetual Succession: The company continues to exist even if the owner changes.
The Conversion Process
Step 1: Obtain DSC and DIN
All directors of the new company must have a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
Step 2: Name Approval
Choose a unique name for your company and apply for approval through the MCA's RUN service.
Step 3: Drafting MOA and AOA
The Memorandum of Association (MOA) and Articles of Association (AOA) define the company's constitution and internal rules.
Step 4: Filing for Incorporation
Submit the final incorporation forms along with the necessary identity and address proofs.
Conclusion
Converting to a Private Limited company is a significant milestone for any entrepreneur. While the process involves several legal steps, the benefits of scale and protection are well worth the effort.
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