Moving from Sole Trader to Ltd Company

[offtherecord]

I run a small sole trader e-commerce website selling goods imported from the USA.

I have inventory value of around £10k as I just received a large new order. The company who provide the stock aren't expecting payment until I have sold enough to pay them back.

I'd like to change my business to a Ltd company but not sure how to transfer the stock? As these are current assets does that exclude me from Capital Gains? They'd be transferred at cost price.

Any advice much appreciated.

 

[Scalloway]

You transfer the stock at cost to the limited company. The value is a director's loan that the company can repay when it has funds. There are no tax consequences.

 

[BizEnergyDeals]

I run a small sole trader e-commerce website selling goods imported from the USA.

I have inventory value of around £10k as I just received a large new order. The company who provide the stock aren't expecting payment until I have sold enough to pay them back.

I'd like to change my business to a Ltd company but not sure how to transfer the stock? As these are current assets does that exclude me from Capital Gains? They'd be transferred at cost price.

Any advice much appreciated.

Profits made for selling the inventory at a profit as a sole trader would be covered under Income Tax rather than capital gains.

In my view, selling them to your limited company at cost would be the cleanest way to move forward, and would help minimise/eliminate the personal income tax.

 

[Swiss Vans]

I think you "gift" them to the limited is teh easiest way

 

[Frank the Insurance guy]

I think you "gift" them to the limited is teh easiest way

Don't do this as you will then be personally out of pocket! As advised by others, best is to transfer the goods at cost price. If the company does not have the funds to pay you, then it creates a loan that the company can repay you once it has the funds.

 

[DontAsk]

You transfer the stock at cost to the limited company. The value is a director's loan that the company can repay when it has funds. There are no tax consequences.

You can also build in good will value into the loan, if there is any.

What is your turnover?

What's the reason for changing to Ltd? Liability?

This is where an accountant is useful. If it's worth setting going Ltd then a good accountant should save you at least what they charge.

 

[BusinessBHub]

Profits made for selling the inventory at a profit as a sole trader would be covered under Income Tax rather than capital gains.

In my view, selling them to your limited company at cost would be the cleanest way to move forward, and would help minimise/eliminate the personal income tax.

Definitely the way to go