A client query:
“I am now in a very small way of business with a turnover of less than
20k and minimal assets. As I am nearing retirement I have no ambition to
expand the business once again, nor to employ anyone.
“In view of this my own feeling is that being a limited company, with its
additional administrative burden and public disclosure of its finances,
is no longer desirable.
“Would you please outline the steps necessary for me to disincorporate
and to continue as a sole trader. I have read elsewhere that for larger
companies disincorporation can be a costly process, but as the business
is now so small I thought maybe it would be worth considering.”
“1. Pick a date – end of financial year may be good
“2. Register as a sole trader in advance of that
“3. Open sole trader bank account, sort out stationary, insurance, etc
“4. Cease trading as company on agreed date & start trading as sole trader
“5. Get all outstanding company debts in, pay any creditors
“6. Sent final records to us for cessation annual accounts
“7. Pay tax bills
“8. Apply for strike off of company, which costs £10. There is a three month waiting period for objections, then the strike off is automatic at Companies House
“We tend to transfer assets from the company back to sole trader at tax value.
“The only complication can be value of any good will in the company name, which would be a disposal (taxable) by the company to yourself. In your case I don’t think there is any value in the name as you are not generating super profits (profits over and above a working wage for you plus return on your capital), but I mention this for completeness.”