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Partnership to Private Limited

07 October 2010

I would like to know the benefits/advantages and disadvantages of converting a Partnership Concern to Private Limited Company ?

Thanks in advance

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Ganesh iyer (C.A M.com B.com(accounting and finance) ncfm) (75 Points)
Replied 07 October 2010

there are advantages as well as disadvantages however i am illustrating those which i am aware of...

advantages-such as increased flow of capital as limit of members is upto 50 whereas in case of a partnership firm its only 20, liability of members of a pvt. ltd co is limited...basically if one has an idea of expansion the can go for conversion into pvt .ltd co.

disadvantages- there are certain disadvantages also such as if u see that inflow of capital is possible at the same time there will be dilution of profits...., there are a lot of formalities involved in conversion,as well as assets contributed by the partner to the firm previously will be treated as the company's asset and not that partners asset.....etc..