[jamesbeat]

Hi, I'm new here, sorry to jump straight in with a list of questions, but I hope someone can help me...

I'm thinking of changing from being a sole trader to forming a limited company for a number of reasons, but I'm very confused about some of the details.

I have a clothing retail business and I have a concession within a larger store, with whom I have a lease agreement.

I have around £30000 worth of stock, and around £5000 debt in the form of an overdraft on my business bank account (although this is up and down almost daily)

I have a few questions:

If I form a limited company, would I have to open a new bank account?
If so, what would I do about my overdraft? I can't afford to pay it all off in one go (or else I wouldn't have an overdraft in the first place...)
Would I set up a new account with an overdraft and use that overdraft to pay off my other one?

What would happen with my stock? Would I sell it to my company and thus make the company £30000 in debt to myself?

What about my lease agreement? Could I pass it on to my company, or would I need to ask the landlord to agree to canceling it and drawing up a new one? (I doubt he'd be very pleased about doing that)

I know the last question depends largely on the terms of the contract, but what is usual in these cases?


Thanks in advance for any advice

[boxby]

Originally Posted by jamesbeat

Hi, I'm new here, sorry to jump straight in with a list of questions, but I hope someone can help me...


I have a few questions:

If I form a limited company, would I have to open a new bank account?
If so, what would I do about my overdraft? I can't afford to pay it all off in one go (or else I wouldn't have an overdraft in the first place...)
Would I set up a new account with an overdraft and use that overdraft to pay off my other one?

What would happen with my stock? Would I sell it to my company and thus make the company £30000 in debt to myself?

What about my lease agreement? Could I pass it on to my company, or would I need to ask the landlord to agree to canceling it and drawing up a new one? (I doubt he'd be very pleased about doing that)

I know the last question depends largely on the terms of the contract, but what is usual in these cases?


Thanks in advance for any advice

Hi

A limited company is a seperate legal entity. This means that everything that was in your name will need to be transferred into the company's name.

Re the bank. You will need a new bank account. You will need a new overdraft facility on that account, and you will have to give a personal guarantee on the company bank account.

Re the lease, this more tricky and depends on the terms of the lease, you may be able to carry it on and sublease to the company, you'll need to read the small print on this one.

Kind regards
Sandra

[elainec100]

I would suggest seeking some professional advice to ensure that you sell you sole trader business to the limited company is the most tax efficient way and that the lease contract can be transferred as part of the deal.