Buying a limited company

[v3rob11]

Would appreciate views on the follwing help needed:

I am buying a Limited company and can't find anywhere on the web of how I would go about changing it to a sole trader business.

It will be an ongoing business when I buy and I will keep the same name etc. I've heard it can be costly and tricky, any help would be very welcome!

regards

[Salas]

I set up a sole trader 2 years ago then changed it to a LTD company after 6 months then changed it back once I realised the massive ammount of paperwork involved in a LTD company.

I got my accountant to sort the whole thing. It was not expensive and there was no headache. You will still have to produce audited company finances for the part of the financial year that the Company has traded as a LTD Company.

Hope this helps.

[buildersmate]

What Salas says is right, but you or your accountant will need to liquidate the LTD, but maintain all the contacts/clients perhaps by maintaining the same trading names and transfer the assets to yourself. Not difficult but you probably will need to employ and accountant to help you

[v3rob11]

thanks salas and buildersmate, your answers are very helpful, i'll look further into this by meeting with an accountant.
thanks again to you both.

[Salas]

You can actually leave the LTD dormant incase you need to change back. You would need to file a �0 revenue figure each year and keep the bank account open.

Your accountant will advise you.

Cheers.

[v3rob11]

salas, if you could answer. This company i'm buying is currently opperating at a loss, i'm not sure if this is legit or not it doesn't matter really as i know the potential but i wondered if when you buy a limited company does the debts of the business leave with the directors??

[Salas]

Not sure on that one, sorry. It is another one for the accountant.

You could always try your local Chamber of Commerce or look on here.....

http://www.businesslink.gov.uk/bdotg/action/ho me?domain=www.businesslink.gov.uk&target=http: //www.businesslink.gov.uk/

Cheers,

SalaS

[v3rob11]

My solicitor says if I buy the �assets� of the company then all potential debts end when I take over?

[Skyline D]

You cannot as such change a Limited Company to a sole trader. You can wind the company up and "sell" the trade and its assets (and liabilities such as they are) to a new sole trader business. It is in all legal respects a new business though.

You would almost certainly be better advised to retain the company though as Salas suggested in order to preserve the name. That would cost �30 per year at present rates and you'd need to file what's known as dormant annual accounts at Companies House. You don't need to maintain a bank account in the company name though.

It's perfectly legal for a company to operate at a loss, though it isn't legal for one to operate if it's insolvent which is a different thing altogether. Insolvency means the liabilities are greater than the assets. You can make a normal loss and still have sufficient assets from past years to be operating legally.

The position with regard to debts of the company will depend on the terms of those debts. They probably won't leave with the previous directors though. You need to be very careful in such circumstances and take professional advice. That is why most business purchasers merely buy the assets of the business they are taking over and form their own new company to run it, not buy the existing company. Your solicitor is correct about that.