# Sole Trader to limited company



## CJC (Sep 3, 2011)

At the moment we are a sole trader but looking to put the company limited. I understand we need to register with the companies house, But what else needs to be done? Thanks Callum


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## shl-kelso (Dec 27, 2012)

It's often easier to use an accountant to set everything up for you and make sure everything is in order - company structure, articles of incorporation, share arrangements etc. after that the annual returns etc are pretty straightforward.


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## GleemSpray (Jan 26, 2014)

Yes - get an accountant to buy and register an "off the shelf" limited company pack for about £100 to £150 all in. 

Other than that you just need two people - a Director and a Company Secretary.

If you regularly do the same work for the same people, then you need to check you are IR35 compliant; this basically means the Inland Revenue might tax you fully, same as an employee of those regular clients would be taxed, for those jobs.


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## Nico1970 (May 15, 2014)

Apart from the formalities of setting up limited company (incorporation, memorandum, articles of association, filing accounts etc), you will also need (if you haven't already got one) a dedicated business bank account - paying into a personal bank account is not permitted.

You will also now need to be mindful of a whole host of legislation, most notably, in respect of health, safety and environment that may not have been specifically relevant to you before as a sole trader. This is even more important if you are going to employ people.

Insurance is incredibly important too - if the general public are likely to come into contact with you or your premises you will need public liability (PL) insurance. If you are an employer, there is a compulsory requirement to have employer's liability (EL) insurance.

Don't forget VAT registration if your turnover warrants it - although, bear in mind that with the benefit of charging VAT, you become a lot more visible to the 'system', with the commensurate obligation to maintain good records of income and expenses and file returns. For even a moderately small business, this can be a burdensome task and hence a decent accountant is indicated.

It's not all bad, of course, apart from the tax benefits, the biggest benefit of setting up a limited company is the safety net of 'limiting' your liability - the company is a separate legal entity and if it runs into difficulty, your own personal assets are safe. Sole traders are personally responsible for their business debts, but the liability in a private company is usually limited to the shareholders.

Bear in mind, (particularly if you are going to be a director of the new company) directors have responsibilities that include making sure the company is run properly. The Companies Act 2006 legally obliges directors to do certain things and act in a certain way - this can be a bit of a shock if you are used paddling your own canoe. You simply cannot just put all the company funds on the next dead cert at Newmarket..

Although it is indeed relatively easy to set up a limited liability company (it can be done online for £15 iirc), it is worth seeking out a solicitor who can advise accordingly per your specific needs and business.

Good luck!


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## CJC (Sep 3, 2011)

By the sounds of things where nearly there, We have always been VAT Registered, Insurances have always been in place public and employers, Always held a business account too.


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