Our Guide to Moving From Self Employed to Limited

Are you thinking of moving from being a sole trader to a limited company? Then you need to read this blog! There are a few things you will need to get into place when making a move from self-employed to being limited, and it all needs to be done before you send any invoices to clients or make any big announcements! You need to tackle many things, so if you are thinking of doing this yourself, then below are a few things you need to do to complete the process.


Going Limited Task List

If you are already working with an accountant or going to hire one, it might be an idea to speak to them about your intentions on going limited, as some of the tasks could be completed by them on your behalf. If not, then here are the steps you will need to take to move from a sole trader to a limited company.


Choose a Company Name

When you are moving to be a limited company, you are legally separated from the business, so you must choose a name to register your business. This can be the exact name you are already trading under but just adding LTD or Limited to the end. It is worth checking on Companies House that there is not already a company trading under that name; this saves time having to repeat any paperwork when registering with them.

There are a few rules surrounding company names, so it is worth reading up on them on the Companies House website, where they tell you what is and is not acceptable to use as a company name.


Register With Companies House

Once you have chosen your registered business name, you need to register it with Companies House. You will need to appoint company directors and register anyone with any shares in the business.
The company will need at least one company director and one shareholder registered. There is a fee payable to Companies House at the point of incorporation. Currently, this is £12 if done online and £40 if done by post.

You will also need to choose a registered office to be the official address of your business, and this can be your accountant’s office if they offer this, your home or office address.

Update HMRC

You will need to update HMRC that you are no longer a sole trader and now a company director. This does not mean de-registering for self-assessment.

You will still need to complete this annually, but more infirming them the need to register the company for corporation tax and a change in your national insurance status. If you are planning to pay yourself a salary or any staff a salary, you will need to register for PAYE with HMRC and VAT if this is applicable.

Open a Business Bank Account

Once you have your certificate of incorporation, you will need to open a new and dedicated business bank account. This will need to be in your business name and solely for business transactions.

High street banks are traditionally a little slow in opening new business bank accounts, so if you need to get one quickly, consider using online banks such as Tide, Starling or Mettle. We have another handy blog on this topic: Do I Need a Business Bank Account?


Update Your Customers

Once everything is in place, like your registration, your new bank account and everything is confirmed – it’s time to update your clients! If you invoice your clients, you must create a new invoice template with your updated company details. Such as the name and bank account, and make them aware of any important information they may require for their records, such as new insurance details or change of registered office.


Hiring An Accountant To Do The Leg Work

Of course, there is another way to do it, and that is to hire an accountant to do it for you! The benefits of doing so are that you have peace of mind that the vital end of things such as companies house and HMRC will be completed correctly. You will have to open the bank account still yourself and update your clients – but the legal end of things will all be taken care of for you.

Here at RJF Accounting, we offer a wide range of services from VAT to payroll and everything in between. If you are struggling with your business’s expenses, why not speak to us today?

Further Reading From RJF Accounting: