Sole Trader to Limited Company

Strantona Registered Posts: 14 New contributor 🐸
Can anyone help, Im new to this I have a sole trader who has a few thousand pounds worth of assets, He has now set up as a Limited company.

Im just in the process of doing his accounts, now when ive input the o/bal from the sole trader accounts on to the Limited Company where do I double entry ??? I was thinking on to Directors Current account......... then over the next few years when he can afford to, take the moneys back by reducing the current account.

At the end of the day if he was to cease as a sole trader he would own the assets left???
I Think anyway.........mmmmmmmm......


  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    You do not transfer closing balances from Sole Trader to Ltd, however the director can introduce assets at a realistic market value, not the CA balance at end of sole trader. You are right that these items would be credited against directors loan account in the company.

    You may need to check if there is a transfer of any stock and you could also consider if any goodwill has been passed from the Sole Trader to Ltd.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    You have a choice (in fact many choices..):

    You can transfer balances (including to CA's) to the company, or you can transfer some assets at OMV or you can transfer all assets at OMV.

    You have to weigh up whether you want incorporation relief, or not, balancing allowances/charges in the hands of the sole-trader, or not, a capital gain arising on the disposal, or not, whether you want it to be a transfer as a going concern, or not, whether you want to capitalise a goodwill value, or not.. the list continues..
Privacy Policy