Legal minefield around transfer of business/share issue.

[Ana_Mac]

Hi,
I'm in the process of incorporating my business and would like some advice please!

1) I have invested a sum (£x,000) into my sole trader business (mostly to set up contacts, but also invest in equipment -though not much), which has so far not made a profit (it has been running two years and is now almost breaking even).

2) I need to run this business as a limited company to limit my liability but also for dealing with customers.

SO:
Can I legally use the ltd company to buy the sole trader business (for £x,000 even though assets are limited and the value is embodied value)?
OR
Can I legally issue myself £x,000 of shares without investing further capital? (This seems a bit dodgy to me!)

Many thanks,
Ana

[Tungstone]

You can incorporate
Need to be aware of your CGT liabilities

Various reliefs are available though

[Ana_Mac]

Hi Tungstone,

Thanks for your reply, any advice about whether either of the two options is legal/preferable?

Thanks a lot,
A

[Kent Accountant]

Hi,
I'm in the process of incorporating my business and would like some advice please!

1) I have invested a sum (£x,000) into my sole trader business (mostly to set up contacts, but also invest in equipment -though not much), which has so far not made a profit (it has been running two years and is now almost breaking even).

2) I need to run this business as a limited company to limit my liability but also for dealing with customers.

SO:
Can I legally use the ltd company to buy the sole trader business (for £x,000 even though assets are limited and the value is embodied value)?
OR
Can I legally issue myself £x,000 of shares without investing further capital? (This seems a bit dodgy to me!)

Many thanks,
Ana

You need to speak to an accountant about this with a more detailed knowledge of your circumstances. It should be possible to incorporate the business and for the company to purchase the goodwill from you. Even if there are no profits, it may be possible to establish a value for the structure and contacts that you have established.

Why would you wish to issue £x,000 of shares? Most companies are established with no more than £100 of shares and frequently significantly less