A guide to closing your company
It is advised to plan ahead if you plan to close down your company as there are a lot of factors to take into account. Please note that in many cases planning early may be impossible, in those common cases its always best to be prepared to take professional advice from a lawyer, insolvency practitioner or company accountant.
Most common reasons to close a company
The company is insolvency
The directors want to retire
The company is not proving viable
The company cannot be rescued.
Most common methods used to close a company.
Members’ Voluntary Liquidation
The procedure used when the owners of a company decide to put it into liquidation and there are enough assets to pay all the debts of the company. A professional called a Licensed Insolvency Practitioner is used to facilitate the process.
Creditors’ Voluntary Liquidation
The company procedure used this is when the company owners decide to put the company into liquidation when there are not enough assets to pay all the debts of the company. A professional called a Licensed Insolvency Practitioner is used to facilitate the process too.
When a person is owed at least £750 and loses patience with the company this is when a court makes a “winding-up” order for the company to be wound up. The court appoints and pays for a liquidator but can recover all or some of that from the sale of any assets.
Company Dissolution: Thus is only applicable to a company if, in the past three months, it has not:
Traded or otherwise carried on business;
Changed its name;
Disposed for value of property or rights that, immediately before ceasing to be in business or trade, it held for disposal or gain in the normal course of that business or trade; or
Engaged in any other activity except one necessary or expedient for making a striking-off application, settling the company’s affairs or meeting a statutory requirement. A company can, however, apply if it has settled trading or business debts in the previous three months.
Tips when considering closing down a company.
What are the reasons for closing down a business?
Did your original business plan account for emergency situations?
Always Refer to your company formation documents to see if there are any shareholders agreements in place or formal instruction in the articles.
Know your companies tax liabilities
List all the company rental or lease agreements.
Pinpoint all the closing account figures with suppliers
Be prepared to go and meet with important and key customers.
Safeguard assets and get an idea of market values of key assets.
Try and collect as mush money as possible to prepare for contingencies.
Know your regular operating costs.
Try and pinpoint a date when your business will close
Legal and regulatory requirements when closing a businsess
Getting your paperwork up to date
Inform Companies House
Know your Employers responsibilities
Be compliant with all taxation such as VAT, NI, PAYE and Corporation tax
Preparing a plan to close down your business
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