Converting Ltd Co into a Partnership

[Malgorzata Maryniak]

Hello. Is it viable to convert a Ltd company into a partnership? If so, how should I handle transfer of the assets in cash?

 

[Scalloway]

I personally wouldn't recommend changing from a limited company to an ordinary partnership.

Do you have any debts that need to be paid off before the company is closed down?

 

[Malgorzata Maryniak]

No, all debts will be settled. Why is it not recommend? Please advise

 

[Scalloway]

The partners in an ordinary partnership are jointly and severally for the debts of the partnership. Each partner has the power to bind the partnership to an agreement. So theoretically one partner could enter into a financially ruinous agreement then disappear and leave the other partner to pay off the debt. Hopefully this will never happen to you but it is something to think about.

If your company has less than £25,000 pounds available when everything is paid off then you can file a final set of accounts and a final corporation tax return then have the company struck off.

https://www.begbies-traynorgroup.com/articles/tax/esc-c16-what-is-it-and-what-does-it-mean

 

[Gecko001]

Have you thought of an Unlimited Company as an alternative?

 

[Malgorzata Maryniak]

Thanks. A partnership, LP or LLP will better meet our needs. The company's capital is more than £25k.

 

[Scalloway]

As the cash available for distribution is more than £25,000 the company will need to be put into liquidation.

https://www.gov.uk/liquidate-your-company

 

[Malgorzata Maryniak]

Thanks Scalloway! It cleared up a lot for me.

 

[Lisa Thomas]

As Scalloway suggests look into a Members Voluntary Liquidation

 

[Malgorzata Maryniak]

Thanks Lisa!