When and How to Convert a Proprietorship to a Company

Conversion from sole proprietorship to a private limited is allowed under Section 47(xiv) of the Income Tax Act as a tax-neutral transfer, provided all assets and liabilities are transferred at book value. Step 1: Incorporate the private limited. Step 2: Pass board resolution and proprietorship resolution approving the transfer. Step 3: Execute transfer deeds for each asset (trademark, domain, equipment, contracts). Step 4: File Form GST REG-07 or amendment for GST transfer. Step 5: Update bank accounts, payment gateways, and contracts. FEMA compliance is required if the proprietor or the new company has foreign investment or NRI involvement.