To grow the business it is necessary to bring more funds in the firm. For a proprietorship firm the best transformation can be a partnership firm or Limited Liability Partnership. The process will remain same for both with some minor changes as both the types’ falls under different ACT. Partnership firm follows the rules of Partnership Act while LLP governs by Limited Liability Act.
Following are the steps which need to be followed while converting to a partnership firm from proprietorship firm.
- Find the correct partner having similar interest with existing business activity.
- Draft a partnership deed including the clauses related to conversion of proprietorship firm into partnership firm.
- Register the partnership deed with Registrar of firms.
- Apply for conversion of current account with the bank.
- Transfer the assets and liability of proprietorship firm.
You may refer Blog - Know How to Convert Proprietorship into Partnership Firm for more details.