Changing your UK Ltd Company to trade as a Sole Trader is a straight forward process, we can assist you
Words by Brigitte Kudor
How to change from an LTD or an LLP
If an individual wishes to switch back from having UK Limited Company status to Sole Trader status it is straight forward, here we'll show you how to;
Unlike a Limited Company or Limited Liability Partnership Sole Traders are not officially registered in the same way – they are not obliged to be registered with companies house like an LTD or LLP. A Sole Trader will still have to inform HMRC of his/her status. If your LTD or LLP is still active you would have to cease trading under it.
There are several points to consider before becoming a Sole Trader
1. Sole Traders are ‘not’ protected by Limited Liability status unlike LTD’s. The need for this will depend on the current liabilities of your field of work, you mat find your Commercial Combined insurance is affected by this.
If you decide that you wish to dissolve the company that you currently trade under there is an official process to follow for ‘winding up’ the company. Your final accounts will need to be filed with HMRC and will need to be provided along with tax calculations owing to the revenue. Any capital distribution to share holders will need to be justified. Only when all the finances for the company have been accounted for, this includes closing any business bank or accounts, will the company be struck off the official Companies House register.
If the your LTD or LLP company has made a loss during its trading activities, you may wish to discuss this with our Accountancy Advisors prior to dissolving the company. When your company no longer exists or trades, any corporation tax losses recorded by the company are lost. Normally these losses would carry forward to the next accounting year to be used to reduce the tax owed against the company increasing future profits. When your company is dissolved these losses will no longer be viable to be carried forward.
If you think you may need trade with the company again in the future then there is always the option of making the company dormant allowing you to reactivate it for use at a later date.
For more information or if you require some impartial advice, please feel free to get in touch via telephone on +44(0)207 889 3000 or you can email your enquiry to; firstname.lastname@example.org where one of our team can put you in touch with the relevant advisor.