All You Need to Know About Starting a Company
Conversion From Proprietorship to Private Limited Company
So many people start out as a Sole Proprietorship because they have low compliance requirements. But as soon as the business grows, the bank accounts and the tax filings of the Sole Proprietor and of the business need to be separated. So, in order to accomplish it, we have to convert the Sole Proprietorship into a Private Limited Company. The process is quite simple. You just need to start a private limited company and submit an agreement between the sole proprietor and the private limited company which will declare that all the assets have to be transferred to the private limited company.
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GuideSkillAdvantages of Private Limited Company
No personal Liability to partners
On growing businesses need to lend money frequently. Partners have the personal liability for all this debt in a general partnership. So, in case of non-payment of debt by the business, the partners made to pay this debt by selling their personal assets. In a private limited company, personal assets of the partners are safe and only the amount invested in starting the business will be lost under any circumstances.
Investment-ready
Private limited companies can easily gain equity funding because it has a very clear distinction between shareholders, directors and limited liability. Moreover, venture capitalists and private equity funds are most unlikely to invest in any other kind of structure. Because, LLPs will definitely involve them as partners in the business whereas an OPC can have just one shareholder.
Good Capacity for loan taking
For a private limited company, bank loans are quite easy to obtain. They also have the option of issuing debentures and convertible debentures with them.
