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A Proprietorship firm generally converts to a Limited Liability Partnership (LLP) to reduce its liabilities. An LLP is a business that has a minimum of two members and has no upper limit on the number of members. After conversion to an LLP, individual partners are safeguarded from joint liability produced by another partner's misconduct since no partner is liable for the illegal actions of other partners. A Proprietorship of professionals, micro and small businesses that are family-owned or closely-held typically prefer the LLP form of business.
Proprietorships convert to an LLP to take their business to the highest level. When a Sole Proprietorship converts to an LLP, there forms a joint venture made up of partners whose liability is restricted to the capital invested by each. The personal property of the partners is not liable for the firm's debts under an LLP. So, an LLP has a broader scope of business than a Proprietorship which pushes it to convert to LLP.
Key points of LLP
Documents required for conversion to LLP
The following are the documents required for conversion of Proprietorship to LLP:
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