I have started a Wholesale Cloth Store last year on June’15 under the partnership with my brother and father in the partnership proportion of 10% (my father), 45% (Myself) & 45% (My Brother) with total capital investment of 5 lakhs. I have prepared a partnership deed for Shop registration and for Opening a Current Account in Bank. But I have not prepared a shop pan card till date and not registered my Partnership. Now I wanted to convert it into Sole Proprietorship on my name, so that I can file returns as Sole Proprietorship. Both the partners are agree and willing to do these. All the Business transaction are carried out through this Current Acc. Pls. help me to get the simplest procedure for these?
1) with the consent of partners firm can be dissolved or if it is partnership at will with consent of any partner
2) deed of dissolution should provide that assets , goodwill of firm shall remain with you and other partners reimbursed
3) obtain PANcard in name of sole proprietorship
4) open current account in nane of firm and licence under shops and establishment act
1. Is there any clause in the said partnership deed specifying the terms for resigning/retiring from the partnership?
2. If yes, ask your other partners to resign/retire as per the said clause by complying with the terms mentioned in the partnership deed for the said purpose,
3. Once both of them resigns/retires, the partnership firm gets converted to proprietorship firm by default,
4. Alternatively, all the partners can sign an affidavit to dissolve the partnership firm and style it as a proprietorship firm owned by you after they collect their share of the investment in the firm.
1. There is no method to covert the partnership into sole proprietorship.
2. For this you have to first dissolve the partnership and distribute the capital and profits among yourself.
3. Thereafter open a new bank a/c and continue the business.
4. In the deed of dissolution of partnership do mention that other partners have got objection in your further continuance of business by you solely and may be by using the same trade name.
1. The Partnership firm would have to be dissolved through drafting of a dissolution deed. The assets/goodwill/capital remains with you, and the erstwhile partners would be reimbursed for the same. You may also impose reasonable restrictions on them to restrain them from interfering with the carrying on of business in future.
2. To start sole proprietorship you require the PAN card, Current Bank Account in the name of the business you want to do to be operated by you as Proprietor & Registration with the Government Department where the trading business you want to do is required. In case this being service providing business the registration for service tax with revenue department will be required, similarly if this will be with regard to sale of goods the registration for the VAT will be required with the local State government. If it is being operated from a shop or commercial place then registration for the Shop & commercial establishment will be required with the local state government. No such written deed is necessary for the Sole Proprietorship Business. However if any of the Government Department where the Registration of the business is required seek a written deed of the proprietorship business then one can reduce all the details with regard to the identity of the owner, the nature of business to be carried out, financial, property & other Capital the sole owner contributed, the details of bank accounts to be maintained for the business, the full details of loans or any financial advances taken for the establishment of the business, property mortgaged for this purpose & mode of repayment, nature of accounting, details of the books to be maintained for the accounts, the person/s who will be beneficiary in event of death of the sole owner etc.
One last question, since i have started this firm in June'15 and now if i dissolve my partnership and open a new a new Current Acc as Sole Proprietorship by this month. So, i have to file my returns as Sole Proprietorship or as Partnership basis. And what about Shop Act i leave it as it is or it need to renew it ?
The ITR must bear profit and loss of both a/c.
1. File all returns as a proprietorship firm,
2. You shall have to mention that the partnership firm has been converted to proprietorship firm with the consent of other partners.
1) you will have to intimate income tax department of dissolution of firm and income tax returns of firm till date of dissolution has to be filed
2) consult a CA on this regard
The returns for FY 2015-16 would have to be filed by the Partnership. You require registration under S&E Act if the business is going to be operated from a shop or commercial place.