How Do We Legally Convert a Proprietorship Firm into a Partnership Firm?

Legal Steps to Convert a Proprietorship Firm into a Partnership Firm

What legal steps do we need to take to convert a proprietorship firm into a partnership firm? In the proprietorship firm, we have a service tax number and the profession tax number of the proprietor. What is the next procedure?

Thanks & Regards,
Mita

Proprietorship and partnership are two separate/different entities. In a proprietary setup, the proprietor is the sole owner of the business. In contrast, in a partnership, the partners are the owners of the business. Even if you have the same name and nature of the business in a partnership, you need to have all the registrations, licenses, code numbers, etc., separate in the partnership.

Steps to Establish a Partnership Firm

You need to first sign a deed of partnership, get it registered with the registrar of the partnership firm, open a bank account, apply for a PAN number, and obtain the required registrations, licenses, codes, etc.

Regards.

Mr. Keshav's point is absolutely correct. So, follow his instructions. After obtaining the PAN in the name of the partnership, proceed with registering for service tax and all other necessary government departments.

Thank you.

To convert the firm from proprietorship to partnership, first, we need a partner with mutual understanding towards the goal of the business. A deed of agreement should be created in accordance with the codes and ethics to run the business, which will be prepared by an advocate and registered in the registrar of the firm's office.

Subsequently, a joint account will be opened based on the name of the firm. It is essential to have a PAN number and obtain a service tax certificate. Additionally, depending on the workforce, PF and ESIC registration may be required along with other necessary government statutory registrations.

Regards,
Akshay

As advised by others, this Partnership firm is going to be altogether a new firm for which you have to obtain all statutory registrations, certificates, codes, etc., in the name of the Partnership Firm. There is no automatic conversion, amendment, or transfer from the existing Proprietorship firm to a Partnership firm. Therefore, obtain the following:

1. Registration Certificate from the (Sub) Registrar of Firms
2. Registration with the state government labor department & under the Shops & Commercial Establishment Act
3. PAN
4. TAN
5. Service Tax
6. If it is going to be a small scale or medium establishment, then under MSMED Act and NSIC
7. VAT registration if the sale of goods is involved
8. PF/ESI registration.

For your information, there is one more option to have a Limited Liability Partnership Firm (LLPF), the details of which are attached.

Regards