To understand whether assets belong to a company or you personally, it depends on the structure of the business. Whether you are operating as a limited company or a sole trader, this can determine who the assets belong to. Within a limited company, anything that is bought by the company belongs to the company and anything bought by the director, belongs to them personally.
What are limited company assets?
Limited company assets which are purchased through the company are for use within the business and are typically broken down into different categories and subcategories. They can be identified as either tangible or intangible:
- Tangible assets – These are physical assets which include property, equipment, vehicles and machinery, anything that you can physically touch or see.
- Intangible assets – These are assets which can’t physically see or touch and are typically harder to value. Brand reputation, goodwill, intellectual property.
Limited company assets can then be further subdivided into those that convert quickly into cash – normally within 12 months and these are called current assets, fixed assets can’t be so easily converted into cash.
- Current assets – Anything from short term investments, cash at bank, inventory, deposit accounts
- Fixed assets – These are long-term investments, land and plant.
What is the difference between personal assets and assets that belong to the company?
The structure of a limited company means that your business is considered a separate legal entity to the director. This means any assets that the company owns, should be registered to the company and be on the company’s books. Personal assets are purely associated with the directors of the company and because of limited liability, they cannot be intertwined.
Can I transfer assets to myself?
It’s not uncommon for directors to transfer limited company assets to and from a company to their own personal ownership. However, when doing so, the value of the assets in question need to be taken into account and they must be transferred at full market value. A director could not buy an asset below market value as it would be deemed a transaction at an undervalue.
Assets need to be itemised on an invoice prior to any transfers and personal and company bank accounts then need to be updated accordingly. The company’s books should then be updated accordingly showing that any transfer of assets has been done in the proper manner.
What happens to my assets if I close my limited company
When you close a limited company, the assets within the business are sold with any cash raised used to be distributed. The nature of how this cash is used will be determined by if you are going through a solvent or insolvent liquidation.Find out more about closing a limited company
What happens if Bailiffs try to recover assets?
Bailiffs are often sent to collect company assets after a creditor has issued a county court judgement and have still not received their payment. They cannot collect any personal assets and can only collect assets that belong to the company. A director should be able to prove which assets belong to themselves and which belong to the company.Find out more about what bailiffs can take here
How we can help
If you’re concerned about bailiffs coming to collect assets, or you’re worried about which assets you may, or may not be able to keep during liquidation, we can provide you with free confidential advice. We can help advise you on which assets are your own and which belong to the company, we can also help you understand your financial situation and guide you on the best process available to your company to help you achieve your goals.
Assets within a limited company, whether going through a solvent or insolvent liquidation will be sold as part of the process. During an insolvent liquidation, they will be used to cover the costs of the insolvency practitioner before then being distributed amongst the creditors. Through the process of an insolvent liquidation, the assets will be sold with the cash being distributed amongst the shareholders.
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