I'm currently operating as a sole-trader, but would like to incorporate next year following the advice of my accountant.
The process of incorporating in Trinidad involves dissolving the company, then re-registering it (adding "Ltd." to the end of the company name; Similar to "LLC" as used in the States) as a firm.
My question is what would happen to any legal documents I already have under my sole-tradership's name? Would dissolving the company also dissolve those agreements, or could I transfer them over to my re-registered firm somehow?
Thanks for your input!
You will need to get some professional advice on this, but I suspect that the answer will be that your new company will acquire all the assets and liabilities of your existing business (that is, the business in which you operate as a sole trader), and that includes all its contractual obligations.
That was certainly the case when I incorporated my business over 30 years ago, but practices might be different in Trinidad. Your accountant should be able to give you a simple answer.
He said that once the name is the same, it shouldn't be too much of an issue unless a lawyer is seeking loopholes, but to be absolutely sure we can have the incorporated business "buy" the un-incorporated one in my accounts. Or something like that. It made sense the way he said it.
Yes, that's more or less what I was thinking.
In any case, it's unlikely to be a big problem. After all, it's a very common situation. That said, regardless of the legalities, it would do no harm if you wrote a short letter to each of your existing clients, pointing out the change, and basically telling them that it won't alter your relationship with them in any way.
Typically this can be handled sort of like this:
- form the new entity
- the new entity creates and ratifies a resolution to assume all contracts and business matters
- then, as an individual, you sign the document agreeing to transfer all contracts and matters to the new entity
If there are actual assets (like cars, domain names, etc.) be sure to move them from your personal name to your business name ASAP.
This is a formality and is usually done in a single page. But, it could be different depending on your jurisdiction.
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