Group News
Keep business and personal life separate to avoid costly issues
The progression from sole trader to limited company is a major milestone in any business venture…and it’s important to get the paperwork processed correctly.
Stephen Beverley, a director with the Sheffield office of professional services group Leonard Curtis, says that the most important thing to do when making the transition to limited status is to ensure that personal and commercial accounts are strictly separated.
“The most important thing of all is to follow all the necessary processes and ensure that you are set up properly,” he explained.
“There are standard things to do if you are becoming a limited company - the most obvious is that you should have a separate business bank account into which all business transactions must be paid moving forward.
“But equally important, you have to remember that things like utilities have to be registered in the company’s name and not your own.
“If this isn’t done and there is, at some point in the future, a payment problem, the supplier can pursue the individual for payment and the fact that your company can’t pay, wouldn’t relieve you personally of the debt.
Stephen added that the division between private finances and corporate is important because failure to do so would mean business owners were not benefitting from limited liability rules.
“Another good example dates back to the time of the pandemic when some business owners took out bounce back loans in their own name rather than the company’s,” he said.
“It might simply have been a case of forgetting to put the word Ltd into the application but that is a costly mistake to make because those loans are now being called in.
“The banks have been happy to work with and support businesses who took advantage of the loan scheme but a simple mistake in paperwork means that the debt will fall to the individual rather than the company and that could prove an extremely costly mistake.
“Make sure that every aspect of your business is separated from you personally and there is no problem.”
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Leonard Curtis is a trading style of Reach Commercial Finance Limited, registered at Riverside House, Irwell Street, Manchester, M3 5EN. Company Register number is 09056450. Reach Commercial Finance Limited is authorised and regulated by the Financial Conduct Authority, FRN: 753686. Reach Commercial Finance Limited is an authorised credit broker and not a lender. We work with an unrestricted number of lenders to find a potentially suitable arrangement for your consideration. ICO registration ZA069234 and you can check via www.ico.org.uk. We will receive commission from lenders. Different lenders pay different amounts depending on different commission models. For transparency we work with the following commission models: fixed fee, fixed rate of commission, percentage of the amount you borrow and rate for risk (this is based on the risk profile of the business). Further details of the commission model, calculation and amount will be disclosed to you throughout your customer journey. Privacy notice.
Leonard Curtis Legal Limited is a limited company, registered in England and Wales with registered number 09820186. Registered office: Riverside House, Irwell Street, Manchester M3 5EN. Leonard Curtis Legal Limited is registered with the Solicitors Regulation Authority with number 626004.