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Updated on 26 Nov 2020  9.00 AM IST | 4 min read

Conversion of Partnership into LLP

As an entrepreneur, India offers you many options to select a business. You can choose among various forms of businesses but before choosing the form of business, you must know the requirements, advantages & disadvantages of all these forms of business. You need to check that which form of business benefits you the most. If we talk about partnership, one of the biggest disadvantages of this form of business is unlimited liability. It means personal assets of the partners are at high risk but many forms of business provide you the advantage of limited liability too. For ex – LLP & Private limited company.

Entrepreneurs now days’ converting the partnership firms to LLP’s to prevent risk of unlimited liability. There are many reasons for converting partnership firm into an LLP and they are as follows –

  1. Separate legal entity
  2. Unlimited number of partners
  3. Limited liability
  4. Ease of ownership transfer

LLP is very popular among small & medium sized businesses. Any partnership firm want to convert into LLP must be registered under India partnership act, 1932. Partnership firms who are not registered under Indian partnership act 1932 cannot convert partnership firm into LLP.

What Is Included In Our Package?

Eligibility Consultation

Document Preparation

Application Drafting

Government Fees

Minimum Requirements To Convert Partnership Firm Into LLP

  1. Minimum 2 partners
  2. DPIN for all partners
  3. DSC for all partners
  4. One designated partner should be an Indian citizen
  5. Consent from all unsecured creditors for conversion in LLP
  6. The partners shall receive consideration only by way of allotment of shares in LLP.
  7. There should be some sort of contribution from every partner
  8. Up to date submission of income tax returns.

Advantages of Converting Partnership Firm Into LLP

  • Separate legal entity
  • Limited liability
  • Minimal compliances
  • Set up cost is low
  • Tax advantages

Procedure of Converting Partnership Firm Into LLP

The procedure of converting partnership firm into LLP is as follows –

  • Step 1 – In the first step, make sure you have DSC (Digital signature certificate) while converting a partnership firm into an LLP. This is the first compulsory requirement to convert partnership firm into an LLP. If you are not having DSC, apply for it as early as possible as the same is required for all the partners.
  • Step 2 – In the next step, you have to obtain a DPIN (Designated partner identification number). It is also a mandatory requirement for at least 2 partners to proceed further with the conversion process. DPIN is a unique number given to each person holding position of LLP partner or director. It is issued for a lifetime without any renewal.
  • Step 3 – In the third step, you have to select the name for an LLP and apply for name approval with ministry of corporate affairs (MCA). Selection of name is not an easy task and it should be selected carefully. It should be unique & limited liability partnership must be used at the end of the company’s name.
  • Step 4 – After getting the name approval from MCA in step-4, you have to file LLP form 17 along with the incorporation application as well as subscribers sheet to convert a partnership firm into LLP. The following documents mentioned below must be mandatorily attached with LLP form 17 –
    1. Copy of acknowledgement of latest income tax return
    2. Statement of assets & liabilities of the firm certified by any chartered accountant of India.
    3. Statement of consent of partners of the firm
    4. List of approval of all the secured creditors for converting a partnership firm into LLP.
    5. No objection certificate from tax authorities.
    6. Approval from any regulatory body/authority.
  • Step 5 – In the fifth step, LLP form 2 & LLP form 3 is also to be filed along with LLP form 17. LLP form 2 includes incorporation document and subscriber’s statements. The following documents mentioned below must be submitted along with LLP form -2 -
    1. Proof of registered office of LLP
    2. Approval of regulatory authority (If required)
    3. Subscriber’s sheet including consent
    4. Details of LLP/company in which person is a director or a partner.

    LLP form 3 includes LLP agreement. LLP agreement should be attached with form-3 and this form is filed once the partnership firm is converted into LLP.

  • Step 6 – After successfully filing all the documents along with the prescribed fees, the certificate of conversion will be issued by registrar after verifying all the documents.

Convert Partnership Firm Into LLP FAQ’S

Any individual or organization can become a partner in LLP. Foreigner’s/NRI’s are also eligible to become a partner in LLP.
No, It is 100 % online procedure. Therefore, there is no need for you to present physically during the procedure.
There is absolutely no additional payment as well as no hidden charges at all.
Yes, after acquiring the DIN & DSC, any foreign national or NRI can become a designated partner in LLP but make sure that one designated partner should be an Indian citizen.

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Due Dates

  • GSTR 3B for August 2020 (15 States/UT’s - Chhattisgarh, MP, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, TN, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh) Oct 1st, 2020
  • GSTR 3B for August 2020 (22 States/UT’s - Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh, Chandigarh, Delhi) Oct 3rd, 2020
  • GSTR 1 for September 2020 (turnover more than INR. 1.50 Crore) Oct 11th, 2020
  • Monthly GSTR 6 for September 2020 Oct 13th, 2020
  • Monthly GSTR 7 (Summary of Tax Deducted at Source (TDS) and deposited) for September 2020 Oct 10th, 2020
  • Monthly GSTR 8 (Summary of Tax Collected at Source (TCS) and deposited by e-commerce operators) for September 2020 Oct 10th, 2020
  • CMP 08 for July to September 2020 Oct 18th, 2020
  • GSTR 5 (Non-Resident Foreign Taxpayers) Monthly Filing Due Date for September 2020 Oct 20th, 2020
  • GSTR 5A (Non-Resident OIDAR Service Provider) Monthly Filing Due Date for September 2020 Oct 20th, 2020
  • GSTR 3B for September 2020 (Annual Turnover of more than Rs 5 Cr in Previous FY) Oct 20th, 2020
  • GSTR 9 and 9C (Annual Return) FY 2018-19 Dec 31st, 2020
  • GSTR 1 (Quarterly) for July to September (Summary of outward supplies where turnover is upto Rs 1.5 crore) Oct 31st, 2020
  • Annual GSTR 4 for FY 2019-20 Oct 31st, 2020