Transfer of Stock from One Business to Another

Growth and development of a business can come in various forms. In some cases, a business owner who is managing business as a sole trader may wish to expand his operations in a company structure. It is a big change; the work involved in this kind of transformation will be massive but as long as you know what you are doing, the whole process should flow as smoothly as possible.

A lot of people always make business transformations from sole trader to company structure and if you are subjecting yourself to this kind of challenge, be mindful of the following steps:

Step 1: Obtain your old files. If it is no trouble for you to simply apply your old files to the new one, you should. You do not have to make drastic changes, you can just continue as you are headed and be able to keep your customer history and inventory listings—and then use them with the new business.

Step 2: File taxes accordingly. Making a change in business structure will also demand that you make changes in the way you file your taxes but if you were caught in the middle of a financial quarter, all you have to do is to file using the former business structure and then transfer the stock balance from sole trader to company during the year-end filing.

Step 3: Transition from old to new. Your goal, of course, is to eventually get rid of the old system and to completely apply the new one. Note that you do not have to rush things; you can gradually transition from old to new, until the business is already running on the new business structure. You want to achieve a steady pace and not a rushed, yet error-laden process.

Be mindful that some accountants will advise against this direction. It is a bit unorthodox but it will deliver what you intend to achieve, so it will worth it, in the end. This kind of shortcut will save you a lot of time, money and effort.