There may come a time when you decide to switch from one business entity to another. For example, if your sole trader business really takes off, you may decide that it’s wiser to become a private limited company. Or, you may decide to expand the scope of your business by joining forces with a friend to form a partnership. There are two steps to doing this. First, you’ll need to end your existing business entity. If you’re a sole trader, you’ll need to notify HMRC that you’ll be ceasing self-employment, and send a final tax return. If you’re a partnership, the nominated partner simply needs to state the intention to close on the final partnership tax return. It’s then a matter of setting up the new business entity following the steps discussed earlier in this guide.