proprietorship/ partnership to company
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
20 January 2011
what are the benifits to convert a business in proprietorship/ partnership to private limited company ?
20 January 2011
The main advantage of converting a proprietorshiup / partnership to a private limited company is that the liability of the members in a private company is limited. In Proprietorship / partnership, the proprietor / partners are no different from the proprietorship / firm and hence they are personally liable for the debts of the company and their personal assets can be attached to discharge the debts of the firm.
On the otherhand, a company on incorporation becomes a legal entity, capable of owning assets in its own name, capable of suing and being sued in its own name. Shareholders / members are the owners and the are liable only to the extent of share capital contributed by them. Their personal assets cannot be attached for the debts of the company.
Other benefits are
1) No. number of members viz., Proprietorship - 1
Firm - Minimum 2 Max. 20,
Private Company - Min. 2 Max. 50
Public Company - Min. 7 Max. No limits
So a company can have more number of members.
2) Transferability of shares - Shares are freely transferable in case of companies.
3) Perpetual Successetion - The death of a proprietor and a partner brings dissolution of the firm while company has a permanent existence. A death of a member does not affect its existence.
On the otherhand, a company on incorporation becomes a legal entity, capable of owning assets in its own name, capable of suing and being sued in its own name. Shareholders / members are the owners and the are liable only to the extent of share capital contributed by them. Their personal assets cannot be attached for the debts of the company.
Other benefits are
1) No. number of members viz., Proprietorship - 1
Firm - Minimum 2 Max. 20,
Private Company - Min. 2 Max. 50
Public Company - Min. 7 Max. No limits
So a company can have more number of members.
2) Transferability of shares - Shares are freely transferable in case of companies.
3) Perpetual Successetion - The death of a proprietor and a partner brings dissolution of the firm while company has a permanent existence. A death of a member does not affect its existence.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- GST ON EXPORT COMMISSION
- Should I report my US salary for January, February, March in Schedule FA?
- RCM INVOICING FROM NOV-2024
- GST input on Mobile Handset
- Material and freight in same invoice
- TDS under section 194J inclusive of reimbursement of expenses
- TDS on Material and Labour in same invoice
- Should I be worried about and rectify reporting Jan,Feb ,March 2024 foreign salary in schedule FA?
- BUYING PROPERTY COULD NOT FILE 26QB
- Gst input for FY 23-24
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
Trending Online Classes
CAclubindia
