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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4360
Experience:  FCCA FCMA CGMA ACIS
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My husband is currently a sole trader but we want to set up

Customer Question

My husband is currently a sole trader but we want to set up a ltd company. His financial year follows the tax year so we are only half way through the accounts. After we have summited final sole trader accounts do we start the p&l and b/s from scratch? Can we still have company accounts running up to April so first ltd accounts year would be 7 months?
Is it best to withdraw the money from the sole trader business account before we set up the business ltd account.
Any further tips on doing the transfer from sole trader to ltd company.
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help with your question. I would offer the following guidance. When you start trading as a limited company you open trading and hence profit and loss accounts and balance sheets from scratch. You could have a short set of accounts for 7 months, but frankly why bother. Just run your company's accounts for a full year. There is no requirement whatsoever for their accounts to correspond with the tax year. Individuals' tax position will dictate whether the sole trader account is terminated at the change over date. It may be more economic to keep it ticking over to the next account period. Have you considered using any surplus to fund a private pension scheme. Up to 40K can by given relief at up to 100% in this way. Here is some general advice from Startups on the subject of conversion which you may find useful: https://www.connector.barclays.co.uk/article/Converting-from-sole-trader-to-limited-company/186 I do hope my answer has been helpful to you.