Conversion of a Partnership firm to LLP

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Convert Partnership to LLP
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Partnership to LLP

After introduction of LLP Act in 2008, many people have started to convert their Partnership Firm into an LLP. The reasons of conversion are self-evident such as the ability to take unlimited number of partners, separate legal entity, limited liability and ease of ownership transfer. Because of these advantages of LLP over Partnership, LLP has become very popular amongst small and medium sized businesses.
The Partnership Firm which wants to convert itself to LLP must be registered under the Indian Partnership Act, 1932. Unregistered Partnership Firm can’t be converted to LLP.
An LLP incorporated by conversion of “Partnership Firm to LLP” must have the same partners as they were in the Partnership Firm. Therefore it is suggested that the Partnership Firm should retire all the Partners who do not wish to be a part of the LLP and if new partners are to be added, they should be added after the incorporation of LLP.

Conversion of partnership to LLP is done through “companyregistrationonline”.

What is Included In Our Package?

  • DPIN for 2 Partners
  • Digital Signature For 2 Partners
  • Name search & approval
  • LLP Agreement
  • Registration Fees
  • LLP Pan Card

Procedure For Conversion

Advantages of Conversion

Minimum Requirements for Conversion to LLP

  • Up to date filing of Income tax returns.
  • The partners shall receive consideration only by way of allotment of shares in LLP.
  • Consent of all the unsecured creditors for the proposed conversion in LLP.
  • Minimum 2 Partners.
  • At least 1 of the designated partners shall be an Indian Resident.
  • DPIN for all the Partners.
  • DSC for all the Partners.
  • There has to be some sort of contribution from each partner.
  • Nowadays, many partnership firms are converting themselves into a Limited Liability Partnership, because it provides some amazing benefits like – limited liability protection, no maximum limits for the number of partners, ease of transferring ownership, etc.

Mentioned below are the steps required to be followed to convert a Partnership Firm into an LLP :

Step 1 – Requirement of Digital Signature:

Typically the Partners in a Partnership Firm do not have a digital signature because it isn’t necessary for the registration of a partnership firm. However, if the partners decide to convert the Partnership Firm into an LLP, then the  Digital Signature Certificate (DSC) is a mandatory requirement for all the Partners.

Step 2 – Requirement of DIN or DPIN:

The Partners in an LLP or the Directors in a Private Limited Company require a DIN / DPIN. A DIN is a unique number that is given to each partner or a director of an LLP. Once, a DIN/DPIN is issued, it can be used without any renewal or any compliance filing for the lifetime.

Step 3 – Getting the Name Approval done:

Once, two DIN/DPIN are available, an application for name reservation of the prospective company can be made to the Ministry of Corporate Affair. The Reservation of the name of the LLP must be obtained before filing the forms for the conversion of the Partnership Firm into LLP.

Step 4 – Filing LLP Form 17:

Application and a Statement of the Conversion of Partnership Firm into LLP (Limited Liability Partnership) i.e., Form 17 should be filed along with the incorporation application. The subscriber’s sheet should also be filed while converting a partnership firm into an LLP. After filling the form 17 the mentioned documents should be mandatorily attached to it:

  • A Statement of the consent of partners of the firm.
  • A Statement of the assets and liabilities of the firm which is duly certified as a true copy by a practicing Chartered Accountant.
  • A copy of the acknowledgment of the latest income tax return (Mandatory).
  • Approval from any regulatory body/ authority (Mandatory).
  • Prepare a list of all the secured creditors along with their consent to the conversion. It is Mandatory.
  • A Clearance or No Objection Certificate (NOC) from the Tax Authorities.

Once, an LLP Form 17 is filled it must be digitally signed by a Designated Partner from a professionally practicing Chartered Accountant/Cost Accountant/Company Secretary.

Step 5 – Filing for Incorporation & Conversion of Partnership into LLP:

For the Conversion of a Partnership Firm into LLP, both “LLP Form 2 and LLP Form 3” must also be filed. LLP Form 2 contains the incorporation document and the subscriber’s statement along with the following attached documents:

  • Proof of address of the registered office of the LLP.
  • The Subscribers’ sheet with consent.
  • In-principle approval of the regulatory authority, if required.
  • The Details of LLP(s) and/ or company(s) in which the partner/ designated partner is a director/ partner (if any).

LLP Form 3 contains the initial Limited Liability Partnership Agreement. This form can be filed once the Partnership Firm is converted into an LLP or while filing for the conversion of the Partnership Firm into LLP. The LLP Agreement must be attached to the LLP Form 3.

Mentioned below are the steps required to be followed to convert a Partnership Firm into an LLP :

On successful conversion of a Partnership Firm into LLP, the Registrar would then issue a Certificate of Incorporation of LLP, and all the properties, assets, interests, rights, privileges, etc. of the firm are now transferred to the LLP. In other words, the complete undertaking of the firm is transferred to the LLP.

However, any approvals/permit/license that is issued under any law to the Partnership Firm will not be automatically transferred to the Limited Liability Partnership. Therefore, fresh licenses or any registrations may be required. This aspect of the conversion of a Partnership into an LLP must be well considered before the conversion process.

If you want to apply for LLP Registration, you can go with Company Registration Online.

Frequently Asked Questions

1. What is the minimum number of Partners required to start a Limited Liability Partnership?
2. Who can become a partner in LLP?
3. Do I have to be available in person to convert partnership to a LLP?
4. Once I pay for the incorporation, is there any other payment before I get the Incorporation Certificate of LLP?
5. What is the time taken by for conversion?
6. Can NRIs/Foreign Nationals be a Designated Partner in LLP?
7. What are the advantages of an LLP as opposed to a Private Limited Company?
8. What are the disadvantages of forming an LLP as opposed to a Private Limited Company?

How “companyregistrationonline” will help in the conversion of a Partnership firm to an LLP?

Our team of experts at “companyregistrationonline” will liaison with concerned departments, for the procedure of conversion of your partnership firm into an LLP. We will make sure that the whole process is performed in a hassle free manner.

Connect With “companyregistrationonline”

Connect with the team of “companyregistrationonline” to address specific requirements for your business. It only takes a total of 20-25 minutes for a complete discussion with our expert consultant.

Dedicated Manager

Once you explain the terms, we will arrange dedicated Account managers, who will give you the best solutions and help you with the whole process.

Real-Time Update

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Duty Completed

Once the duty is finished, you will get documents straight to your email ID and at your doorstep.