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From Ltd Company Back to Sole Trader

Newsletter issue - January 07.

Many small businesses find themselves trading through a limited company, often resulting from the tax advantages of doing so. Many first incorporated when the first £10,000 of company profits was tax free, although this is no longer the case. Incorporating is easy with many reliefs available to ensure there are no adverse tax consequences of doing so. However, going the other way is not quite as simple.

There are still many tax advantages of using a limited company including lower tax rates and avoidance of national insurance by using dividends as well as the benefit of limited liability. However for the very smallest of companies that would prefer the simplicity of a sole trader or partnership set up, the following are just some of the main points needing careful consideration...

In some cases these complications may be minimal and the business owner can literally cease trading as limited company one day and recommence the next day as a sole trader. For further advice in your own situation please contact us.