Q: I have been a sole trader since 1986. Now a major client says they won't trade with me unless I become a limited company. What should I do?
Apr 13 2010
Answered by: Marc Barber Ask a question
It is a common practice for large businesses to insist that suppliers use the limited company legal format. This generally gives the customer greater visibility because they can access the company’s history by searching Companies House as well as being able to access information on the company’s directors including past directorships.
From your perspective, it will take time for your newly formed company to build up a trading history but there can be tax advantages of a limited company format, although there are likely to be additional administrative costs. You will also have to file annual financial reports, annual returns, etc at the Registrar of Companies.
Companies House has some excellent guides on the issues involved.
You might also like to talk to your chartered accountant who will be able to discuss the taxation implications with you as well as accessing any facilities you may have with the bank.
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