Limited company to sole trader?

[mp6790]

I've got myself into a sticky situation being new to business...

I started a limited company with a partner a year ago, who now wants to leave the company. I initially invested £6k and she invested £4k and the business is currently in debt by £7k. I want to continue running the business on my own and put in some more capital. How much is she entitled to to leave the business with? and can I then change from a limited company to a sole trader (but keeping the business name and customers)?

 

[Spongebob]

Does the company have any assets such as stock, debtors, or equipment?

If the value of these assets is less than the £7k that the company owes then the company effectively has no value - and could even be insolvent. In either case your partner has lost her money and can expect nothing back.

You should see an accountant about the best way forward. It could be a good idea to set up a new limited company in your name only and slide the business over into it. I wouldn't recommend operating as a sole trader.

 

[mp6790]

Brilliant - thanks for this. We have no assets as such (just office stationery etc) and it doesn't help that her family member is our accountant!

 

[Spongebob]

Brilliant - thanks for this. We have no assets as such (just office stationery etc) and it doesn't help that her family member is our accountant!

Then get your own accountant...