What is Business Conversion?
Business conversion refers to the process of changing a business entity from one legal structure to another. As businesses grow or change direction, they may require a new structure that offers better compliance, tax benefits, limited liability, or scalability. The conversion must follow procedures laid down by the Companies Act, 2013, LLP Act, 2008, and relevant tax and regulatory laws.
Types of Business Conversions in India
1. Proprietorship to Private Limited Company
⇒ For growth, funding, or limited liability protection.
2. Proprietorship to LLP (Limited Liability Partnership)
⇒ Suitable for small businesses wanting flexibility and limited liability.
3. Partnership Firm to LLP
⇒ Simplifies compliance while retaining partnership flexibility.
4. Partnership Firm to Private Limited Company
⇒ Ideal for firms aiming for expansion, investor funding, or credibility.
5. Private Limited Company to LLP
⇒ Reduces compliance burden and is useful for smaller setups.
6. Private Limited to Public Limited Company
⇒ Required for public fund raising, IPOs, or larger scale operations.
7. Public Limited to Private Limited Company
⇒ For increased control, privacy, or simplification of processes.
Each conversion requires legal documentation, board/shareholder approvals, registrations, and regulatory filings (like ROC forms, PAN/TAN update, GST amendment, etc.).