As you embark on the journey of transitioning from a sole trader to a limited company there are several critical steps you must take to ensure a smooth transition and legal compliance. This transformation involves not only a change in your business structure but also shifts in financial and tax responsibilities, reporting obligations, and potentially, business relationships. The following list of tasks provides a roadmap to navigate through this process, aimed at setting your new limited company on the path to success.

List of Tasks to Complete

Together We Count can assist you with most of the admin involved with setting up a Limited Company. Please get in touch to discuss how we can help.

1. Business Planning: Re-evaluate your business plan to reflect the new structure, and identify the potential impact on your operations, clients, and suppliers.
2. Choose a Company Name: The name should be unique and not currently in use or too similar to another. You can check this on the Companies House register.
3. Register with Companies House: Submit necessary information such as the company's name, registered address, details of the director(s), and share capital.
4. Create the Memorandum and Articles of Association: These documents define your company's purpose and internal regulations. You can adopt standard articles or tailor them to your business.
5. Set up a Registered Office: This will be your company's official address, where all communications and notices can be sent. TWC can assist you with this.
6. Appoint Director(s) and Possibly a Secretary: As a minimum, you need at least one director. While a company secretary isn't mandatory, it can help manage some administrative tasks.
7. Issue Shares: Even if you are the sole director, you'll need to issue at least one share to yourself.
8. Register for Corporation Tax: You need to do this within three months of starting to do business. HM Revenue and Customs (HMRC) will then tell you the deadline for paying Corporation Tax.
9. Register for VAT: If your annual turnover is above the VAT threshold, you need to register for VAT. You can check for the current VAT threshold here
10. Set up Payroll: If you intend to pay yourself a salary, you'll need to set up a payroll system and register as an employer with HMRC.
11. Open a Business Bank Account: It's important to establish a dedicated business bank account. This account will serve as the hub for all financial transactions related to your company, maintaining a clear distinction between your personal and business finances. This separation is vital for tax purposes and overall financial clarity.
12. Transferring Payments: Once your business bank account is set up, it's essential to redirect all financial activities to this new account. This includes receiving client payments, processing payroll, making supplier payments, and handling any other business transactions. To ensure a smooth transition, kindly inform your clients, suppliers, and other relevant stakeholders in advance about this change.
13. Invoices: Going forward, all invoices should be issued in the name of your limited company, rather than in your individual names. Ensure that your company's name, registered office address, and company registration number are clearly mentioned on all invoices and business paperwork.
14. Accounting Software: To streamline your financial management, Together We Count recommends setting up a new Xero accounting software. Xero offers user-friendly features that will assist you in maintaining organized and accurate financial records. It will also simplify your bookkeeping processes and facilitate year-end accounting. Once you have the bank account set up we will set up Xero for you.
15. Maintain Accurate and Up-to-Date Records: Keep track of all financial transactions, director's decisions, details of shareholders, etc.
16. Notify Clients and Suppliers: Inform all relevant parties of your change in business structure and reassure them of your continued service and commitment.
17. Transfer Assets and Contracts: If your sole trader business has assets or existing contracts, they need to be formally transferred to your limited company.
18. File Annual Accounts and Tax Returns: A limited company is obligated to file annual financial statements and company tax returns.
19. Consider Professional Indemnity Insurance: As a director, you may want to consider taking out professional indemnity insurance to protect against potential claims.

Please note that this list is quite general. Depending on the nature and specifics of your business, additional steps might be necessary.

Whether you're new to the world of business or a seasoned entrepreneur, navigating the transition from a sole trader to a limited company can be a complex process. Thankfully, with expert guidance from Together We Count, you don't have to go through it alone. Together We Count ensures a smooth, hassle-free transition, setting the foundation for your business success as a limited company.

Please get in touch if you have any questions. info@togetherwecount.co.uk