How can an existing business be turned into a company?
In outline, the process is for the new company to be registered and then for the sole trader’s or partnership business to be sold to the company at an appropriate value, the consideration for which is the issue of shares in the company. There are many legal, taxation and practical considerations to take into account and your accountant’s advice is essential A typical process would be the following. An existing partnership business worth, say, £30,000 is to be incorporated. The company is registered and a date chosen for the new company to take over the business. There are three partners and they own the business as equal partners. A contract is drawn up between the partners (as vendors) and the company (as purchaser), under which the partners sell the business assets to the company for £30,000, to be paid by the company issuing 30,000 £1 ordinary shares to the partners. As they own the business equally, they get 10,000 shares each.
