i have run a very small business from home for 4 years and wonder
1. is it possible to convert this to a Ltd company
2. Is it possible for the Ltd company to buy this company from me
(at a resonable price ie 3xprofit)
3. would the bank provide a business loan to buy the business
from myself?
4. who would provide this loan and what details do they need.
5. If not what are my options of raising finance.

  1. wolvertrampton
    I think I can answer your question with a little clarification of it. Are you saying you want to turn your private enterprise into a Limited Company, and then for that company to buy your private enterprise? The private enterprise no longer existing because it is the limited company? All sounds a little Enron to me, but I'm sure I misunderstand your question, maybe?
  2. tringyokel
    1. You can form a private limited company which can buy the assets of the business from you at a fair market rate. 2. Here you are talking about an extra payment above the value of the tangible (i.e. touchable) assets such as equipment. This would be for goodwill and could be problematic. There is more than one sort of goodwill and although the sale is legal there could be tax consequences. If the goodwill is inherent in a name or a process then it should be OK. But if the goodwill is really attached to you (as you are the person creating it by performing a service) then it may not really be transferable. To put it another way. If the company bought this goodwill and then you dropped down dead would it still be able to make those profits? 3. At the moment I doubt any bank will lend to your new company without you giving a personal guarantee. It sounds as though you are looking to raise money for personal purposes and any likely source would depend upon the reasons you need the money.
  3. certaxrugby
    Possible is one thing. Practical or advisable is another, Tringlocal makes some good points, and based on the bald facts here the answers might be: yes, yes, no, no-one so none, normal personal loan or try for a straight cashflow loan from the bank. There are other tax and cashflow implications to consider too. Not enough space here to discuss the wide range of issues You may not need to convert to a limited company anyway - talk to your accountant.
  4. SimonC
    You are currently trading as a sole trader. You want to convert to a Ltd company. The basic process is this. 1. Form a Ltd company or buy one "off the shelf". It is actually very cheap to form your own company, but you will need advice to make sure you get a set of rules ("Articles") that are right for you. In practise it is probably preferable to buy an off the shelf company that has been tailored to your needs. 2. A Ltd company is a legal "person" in its own right. It can own, buy, sell property. As a sole trader you do not have a company as such, but you own all the assets used in your trade. The new Ltd company can buy all of these assets from you. This can include the "goodwill" in your current trade. Goodwill generally exists with the business, and is a measure of the value attributed to that fact that customers know the name and will be looking to return to you. 3, 4, 5. It is highly unlikely that any bank will lend anything to a brand new company. But that does not matter, because the company does not need cash to buy the business from you. Companies are owned by shareholders, and the total value of all the shares should represent the total value of the company's assets. These shares are issued by the company. Your new company will buy your assets from you in return for shares. For example, if all the assets and goodwill that you are transferring are worth £100,000 then the company will buy those from you for £100,000 of shares. This is a purely paper exercise and no money is required. But you have not lost anything. Instead of owning £100,000 of assets such as machinery, computers, stock etc, you now own £100,000 of shares. As shareholder you are entitled to receive any profit made by the company in the form of a dividend. I assume that you will continue to work for the company, so you will now be its employee. As such you will also earn a salary. Going forward, your company now has £100,000 worth of assets to use as security against any loan by the bank. This means the business is far more likely to get a loan to finance its future trading. Depending on the value of the assets you transfer there might be some fairly complex tax issues, so if you are serious about this you should talk to an accountant or solicitor (or both).
  5. Fred F
    1. You can "convert" the business to a Ltd company at any time you choose. This can be done very quickly and cheaply. 2. Why would you even be asking this? Unless you are not going to be involved in the business then the answer is no. 3. No - the bank would laugh you out of the door. 4. You won't get a loan for this. 5. At the moment it is difficult to get any finance, but the bank would be the place to go - but not under the circumstances you asked in previous questions. I do not actually see what the point of your questions is. It is your company and you are running it as a sole trader (I assume). To "convert" to a Limited company is a case of registering it with companies house and complying with the rules re directors/shares etc. You can be a Ltd company and still be a single person. You would be the director and only shareholder. Your accountant (or wife or whoever) could be co. secretary. You cannot convert to a Ltd company by "buying" the company from yourself. And the taxman would have a field day if the company bought the company assets from yourself. They can be transferred. If you need to raise finance then sole trader or Ltd. The banks are the best places to try.

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