How do I change from sole trader to limited company?



My name is Christopher, and I’ve been operating in central London as a sole trader for about a decade now. Business is good, and I’d now like to change my business to a limited company so that I can expand my business without sacrificing all of my personal financial assets. There’s just one problem: I have no clue how to go about making this transformation happen. I need advice. How does one go about changing from sole trader to limited company, and what is required of me to make it happen?

Thank you for your help



You can keep your existing business set-up and clients and continue trading as normal, but you need to change the legal structure of your business from sole trader to limited company. To do this, you will have to register a private company limited by shares at Companies House. The easiest way to do this is online through a company formation agent.

The changeover process:

  • Inform all of your existing customers, suppliers, lenders, service providers and employees that you are going to start trading as a limited company.
  • If you do not have a business bank account, you should set one up in your company name because your accounting requirements will be more complex when you start trading as a company.
  • Notify HMRC that you have stopped self-employment as a sole trader. Complete your Self-Assessment tax return as usual. You will then submit tax returns the following year as a director and shareholder.
  • Within 3 months of starting to trade through your company, you must register with HMRC for Corporation Tax.
  • If your sole trader business is registered for VAT, you will have to cancel your VAT registration within 30 days of the change and then and re-register through the company. HMRC may allow you to transfer the existing registration.
  • To be able to pay yourself a director’s salary, you must register your company as an employer. If you employ people already, you should speak to HMRC about the change of business structure.

To avoid any problems or delays, it would be best to speak to a business advisor or accountant before making any changes. They will also be able to assist with the changeover and provide guidance on the accounting and reporting requirements of your new limited company.

2 years ago

Your answer


Browse other questions tagged #sole-trader #limited-company or Ask a new question