Many business people start their businesses as a Sole Proprietorship due to the low compliance requirements. As the business and the incomes grow, there is a need to separate the bank accounts and the tax filings of the Sole Proprietor and that of the business. To accomplish this separation a possible solution is to convert the Sole Proprietorship into a Private Limited Company.
To convert a Sole Proprietorship into a Private Limited Company, an agreement has to be executed between the Proprietorship and the Private Limited Company (once it is incorporated) for the sale of the business. Further, such Private Limited Company so incorporated must have “the takeover of a Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.
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A registered office is required for holding Annual general meetings, for keeping records and receiving correspondence. The registered office can be on owned or rented premises also. The registered office of the company determines its jurisdiction for registration, for instance, a company with registered office in Delhi will come under the jurisdiction of Registrar of Companies, Delhi.
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