Adding a partner to a sole proprietorship
To include a partner in a Sole Proprietorship, the conversion of the Sole Proprietorship into a Partnership firm is necessary. Here are the steps involved in adding a partner to a Sole Proprietorship:
Draft a Partnership Deed: Prepare a legally binding Partnership Deed that outlines crucial aspects of the partnership, including the partnership name, business nature, partner contributions, profit sharing ratio, partner rights and responsibilities, and conditions for partnership dissolution.
Apply for PAN and TAN: Apply for a new Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) specifically for the partnership firm.
Open a new bank account: Open a new bank account under the name of the partnership firm while closing the existing bank account associated with the Sole Proprietorship.
Register with the Registrar of Firms: Register the Partnership firm with the Registrar of Firms by submitting the Partnership Deed and requisite documents as per the registration process.
Obtain necessary licenses and permits: Acquire all the essential licenses and permits mandated for the operation of the business. Such as GST registration, professional tax registration, and any other relevant permits.
Therefore, It is crucial to seek professional guidance to ensure adherence to all legal and regulatory obligations before introducing a partner to a Sole Proprietorship
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