What is a sole trader?
The imbalance of tax and disbalance of financial security with different types of self-employed workers and small business owners in the UK leads many people to the benefits of converting from sole trader to limited company.
A sole trader business is owned and controlled by one -self-employed individual. Therefore, there is no legal distinction between you and the business in which you are the one. This is hugely significant because it means as a sole trader you have unlimited liability for any business debts, losses and legal claims.
What is a limited company?
A limited company is owned by one or more shareholders and also managed by one or more directors. Therefore, the same person can be a shareholder and a director, and you have the option to own and control the business by yourself (as a sole trader) and jointly with other people.
How much does it cost to set up and maintain a limited company?
Companies House charges a small incorporation company fee in which we have to set up a limited company. Formation House offers an online company formation which includes:
A ready-to-trade limited company which is incorporated at companies formation house.
Help and guidance throughout the company formation process and beyond.
All companies need registration documents, including a certificate of incorporation, share certificates, memorandum of association, and articles of association.
Optional services, including company address service, VAT Registration and much more.
Converting Business sole trader to Limited company
For Business decisions, you need to convert your existing small business from sole trader to limited company, you will need to take the following steps :
- Register a limited company
The first step is to register a limited shares company. The most popular and expensive way to set up a company is through an approved company agent.
For registration of a limited company online, you will need :
- A unique company name,
- A registered office address,
- At Least one director,
- At Least one shareholder
- Transfer your sole trader business to the company
The nature of your sole trader business, you may need to transfer your existing business assets (such as property, machinery and equipment) to your new limited company.
New companies are unlikely to have available funds to pay for these assets.
For the formation of assets which can be a complex matter for some businesses, we take the advice of speaking to an accountant, for expert help and also for good advice.