One of the most common questions for business owners is how to convert a partnership into a Limited Liability Partnership. There are several reasons why an LLP would be beneficial for your business, but this article will break down what is the procedure for conversion to LLP.
What Is a Limited Liability Partnership
A limited liability partnership (LLP) is a type of business organization that combines the advantages of a partnership with the protections of a corporation. In an LLP, each partner is responsible for their own legal liabilities, which means that the partners are not jointly and severally liable for the debts and other obligations of the LLP. This type of business structure is best suited for businesses with multiple owners who want to maintain some degree of independence and control while sharing in the profits and losses of the business.
To form an Limited Liability Partnership, two or more persons must agree to create a limited liability company by filing documents with MCA. Most states require only a few basic elements, including a name for the Limited Liability Partnership, articles of organization listing the names and addresses of all the partners, and a shareholder agreement specifying how profits will be divided among the members.
An LLP can have one or more partners. Each partner is responsible for their own legal liabilities and shares equally in any profits or losses that occur during the LLP’s existence. A partner cannot withdraw from an LLP without consent from all other partners.
How to Convert a Partnership into a Limited Liability Partnership
If you consider converting your partnership into a limited liability partnership, there are a few things you need to understand.
First, LLPs are treated as separate legal entities from their partners, so any assets or liabilities of the partnership that its members would have shared will now be attributed to the LLP.
Second, in order to form an LLP, you’ll need to file articles of organization on the MCA website.
Finally, once you’ve filed the articles of organization and registered the LLP, you’ll need to make some changes to your partnership agreement in order to reflect that it is now a limited liability partnership.
Steps Involved in the Conversion:
- Get digital signatures of all partners
- Apply for DIN for all the partners
- Submit the application with RUN-LLP Form on the MCA website
- Submit an application by filling out the form FiLLiP for the conversion
- Register LLP agreement with the MCA website
- Obtain a Certificate of Incorporation for your LLP.
What Does Getting the Certificate of Incorporation Mean for You?
When converting a partnership into a limited liability partnership (LLP), the Certificate of Conversion is issued by the Registrars of Companies. The certificate shows that the conversion has been completed, and all of the required paperwork has been filed. The certificate is also used as proof of formation for legal purposes.
Who Do I Need to Talk to If I Want to Convert My Partnership?
If you are the owner of a partnership, the answer is simple. These steps can make the conversion process easier.
First and foremost, it is important to have accurate information about your partnership. This includes items like the number of partners, their positions, and the percentage of ownership each partner has in the business.
Additionally, you will need to gather any relevant documents, such as articles of organization or partnership agreements.
When converting your partnership into an LLP, there are several key factors to consider. First and foremost, your formation documents will need to be updated to reflect the change. Second, you will need to update your corporate governance structure and management team. Finally, you will need to develop and implement an effective LLP operating plan. All of these decisions will require careful consideration and consultation with legal counsel. Overall, this article summarized the necessary process involved in converting the partnership company to LLP.