Sole Trader to Ltd Assets

Sole Trader to Ltd Assets

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I have two clients whose businesses have grown and profit increased sufficient to incorporate them.

I wonder if anyone could advise me on how to treat the vehicles in both companies?

The courier purchased 1 van on finance (has a couple of years to go before he owns it outright), and 1 van paid in full.

The Cleaning Company has leased a van with 3 years to go.

These vehicles/contracts are in the clients name.  When they begin trading as a Ltd Company, How do I bring them in and how do I handle the payments to the finance or leasing company?

Many thanks in advance.

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By andrew1211
03rd Feb 2014 12:17

Courier - Value at point of transfer, proceeds into capital allowances pool of sole trader. Bring into Limited company accounts and tax pool at proceeds. Claim WDA's in the company. Depreciate in company books as normal. Credit director loan account (DLA) in company books. HP (1) - leave out and debit payments to DLA assuming the company is now paying them but charge interest as a expense OR HP (2) - bring in HP creditor balance and Dr DLA and then treat HP payments from the company as normally would including a deduction for the interest OR HP (3) - leave HP out and consider debiting the interest as an expense and crediting the DLA where the company is not making the payments.

 

Leased van - just expense the payments as normal assuming the company is now paying them, or failing that one might consider expensing the payments ad crediting the DLA.

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