Business Transfer Template – Sole Trader to Limited Company
A business may start out life being run by a sole trader. This means that the business will have little legal formality and no separate legal personality. However as businesses expand and grow, they may wish to change this model and may require a more formal business structure such as a private limited company.
This business transfer template is a basic short form asset transfer agreement covering the situation of a sole trader changing its business vehicle to trade as a private limited company. This transfer agreement documents the transfer of his/her business assets and liabilities to the new company. By properly documenting the transfer, any future misunderstanding or dispute as to the ownership of the assets should be avoided.
This agreement covers the assets that will generally be owned by a sole trader and require transferring, including, the goodwill of the business, its physical assets, stock, IPR, IT rights, premises and contracts. The template also covers what assets are to be excluded from the transfer. The consideration for the asset transfer is the issue of shares in the limited company.
This template assumes that the sole trader will own and control all the shares in the limited company and that the company has already been incorporated. There is no provision for tax, please refer to HMRC's website as required.
For those running a web based business, please refer to our Business Transfer Agreement - Sole Trader to Limited Company (web based business), which is more appropriate for those whose business is conducted online.
This Business Transfer Template is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.