As a sole trader or partnership business grows then it can become beneficial to incorporate.
There are a few things to consider when setting up a limited company to take over your existing business and we’ve detailed these below.
Fixed assets (excluding property)
- Leases to be transferred to new limited company
- Ownership of motor vehicles not on lease to be transferred
- Maintenance contracts on office computers and equipment to be transferred
All customers of the company to be sent a letter informing them of the change, new company name and date of changeover.
All suppliers to the company to be sent a letter informing them of the change and asking that all further invoices and statements be addressed to the new company from the changeover date.
You’ll then need to monitor this to make sure that all invoices are addressed to the company.
- Bank accounts to be opened in the name of the new company.
- Old bank accounts to be closed and balances transferred as necessary.
- Bank security arrangements will need to be changed as necessary to reflect new company status.
- New letters of offer for any term loans and overdrafts will need to be issued by the bank and reviewed by you in detail.
- Make sure that you’ve received a plentiful supply of cheques and lodgement slips in the name of the new company before the date of changeover.
- Have all business accounts transferred including deposit accounts.
- Close allaccounts in the name of the old business.
Order new stationery for the company.
This needs to include all documents issued by the business, such as:
- Letterheads and envelopes
- Compliment slips
- Fax cover sheets
- Order books used to order from suppliers
- Delivery dockets
- Van docket books
- Cash sale books
- Plastic bags, wrapping paper etc.
- Time record cards/sheets
- Any other documents on which the business name appears
Transfer insurance cover.
Inform your insurance broker in writing of the date of changeover and arrange for cover in all areas to be transferred to the company. This would include fire, theft, all motor vehicles, cash, cash in transit, stock, other equipment, public liability, employers liability, product liability, computer insurance and so on.
Inform your utility companies and arrange for the changeover of billing:
- ESB / Airtricity
- Bord Gas
- City/County Council re rates and water charges
Directors personal taxation
Revenue must be informed of the transfer of employment of the directors. Make sure that the directors are registered as employees of the company and that the tax free allowances are transferred to the company.
Where formal contracts of employment are in place, these must be re-issued in the name of the new company and re-signed by the employee and the directors when the changeover takes place.
A notice must be issued to all employees informing them of the proposed change and outlining the arrangements for service and pension rights to be transferred to the new company.
If trade unions are involved an early meeting should be held and any potential difficulties resolved well in advance of the changeover.
If a pension scheme is in place, arrangements must be made to transfer the scheme to the new company and to ensure employees benefits are secured.
Revenue must be informed of the transfer of all employees from the sole trade or partnership to the limited company. Tax free allowance certificates will have to be obtained in the new company. As part of this P45s will need to be prepared for each employee of the sole trade or partnership.
Any areas in which the business has previously had its name displayed i.e. outside its premises, on vans, Golden Pages, or any other advertising medium, must all be changed to show the new company name.
Any long term contracts entered into by the business either with customers or suppliers must be altered to show the new company name and status.
Any computer software and licenses will need to be adjusted to show the new company name.
Any credit cards and petrol cards will need to be re-issued.
Trade associations and organisations
Inform any associations of which the business is a member of the change.
Register the new company for all relevant taxes. Apply for C2 if required.
Please call Noel Murphy today on 021 431 0266 for a consultation to see whether incorporating your business would be worthwhile for you.