Many entrepreneurs start their businesses as a sole proprietorship due to the low compliance requirements. As the business and the revenues grow, there is a need to separate the bank accounts and the tax filings of the sole proprietor and that of the business. To achieve this separation a possible solution is to convert the sole proprietorship into a private limited company and all you need to do is go ahead and start a private limited company and submit an agreement between the sole proprietor and the private limited company (Once it is Incorporated), declaring that all the assets are to be transferred to the Private Limited Company.

1. Private Limited Company has its own separate legal identity and can own property in its own name.
2. In the Company form of Organization it is possible to make a valid & effective contract.
3. A Company enjoys better Borrowing Capacity and it can issue debentures & can also accept deposits from the public.
4. Shares of a Company limited by shares are transferable by a shareholder to any other person. The transfer of Shares is easy as compared to transfer of interest in business which runs as a proprietary concern.
5. Unlike Proprietorships, in a private limited company the liability of the member in respect of the Company’s debts is limited.