sole trader to ltd company rupert scrase 200515
TRANSCRIPT
Sole trader to ltd company
Rupert ScraseBristol SPG
20 May 2015
Number of law firms – April 2015
Type of law firm Number
Sole practitioner 2768 (27%)
Ltd company 3601 (35%)
Partnership 2345 (23%)
LLP 1557 (15%)
Source: SRA - Regulated population statistics
Is it worth it?Advantages Disadvantages
Limited liability May still have personal liability for your professional conduct as a solicitor re: SRA and Legal Ombudsman
Tax savings? Take advice from accountant Increased accountancy fees
Separation of your money and company money
It is the company’s money – can’t just take one off drawings like a sole trader
Increased cost of indemnity insurance
More bureaucratic
Easier to sell your business?
Initial steps Speak to your accountant Speak to your insurance brokerIf decide wish to proceed, then:1. Form ltd company2. Obtain ‘held cover’ letter from indemnity insurer3. Obtain authorisation from SRA 4. Set up bank account5. Start to trade – consider only doing so at start of your
financial year
TimelineTimeline for me setting up Scrase Law Ltd:
August – spoke to my accountantDecember – formed ltd companyDecember – submitted application for insurance coverJanuary – submitted SRA formsFebruary – SRA authorisation grantedFebruary – set up bank accountApril – started to trade
Indemnity Insurance
• Company will need £3m of cover• Expect to pay up to a third more (on basis you have a third
more cover as it will increase from £2m to £3m)• You will need to have ‘held cover’ letter to show the SRA that
cover can be put in place if authorisation is granted• Expect to be asked quite rigorous questions – insurer may
wish to be satisfied that the company is financially secure because of worry about run-off if company folds
SRA Application
• In the jargon there are 3 types of approved entity:– Licenced bodies– Recognised bodies– Recognised sole practitioners
• You will apply as a Recognised body on the same form as any other entity
• You must fill out a:– FA1 Application for Authorisation Form, and,– FA2 form applying to be a COLP and COFA
• Fee of £200
SRA Application
• The FA1 form is lengthy and it may take weeks to gather all of the information you need
• Lots of questions about risk• Expect the application to be approved in about 30 days• You will need to be able to show you will have the relevant
policies/procedures – money laundering, anti-bribery etc.• Application is by email to [email protected]• You can specify the date you wish the ltd company to be
authorised from
Things to do Change notepaper, emails, website (need company name,
registered number, registered office address, the fact it is a ltd company and where it is registered - i.e. England & Wales)
Change business cards Inform clients Issue new retainer letters to clients Inform finance departments of company clients of the change
of your bank account If you rent premises, enter into new lease Change mobile phone contracts and other supplier contracts
to ltd company
Things to do Apply for new VAT and PAYE numbers Register for corporation tax Plan for TUPE transfer if you have staff Obtain new general insurance for ltd company Apply for new registration with Information Commissioner’s
Office to register company as data controller Have a sign made to be displayed at your registered office
(not required if you work from home) Review your will and lasting power of attorney
