Closing your company - Insolvency Advice Centre

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Closing your company

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.

Compulsory Liquidation

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:

  1. Traded or otherwise carried on business;
  2. Changed its name;
  3. 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
  4. 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
  • Inform Employees
  • 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

We provide a source of ongoing expert third party support to help businesses through their chosen path of recovery, stabilisation and growth. This support may be required for the short-term, however some of out clients choose to enlist our services for the long-term in order to benefit from our business development expertise.

 


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This website has been written and intended for registered limited companies in the UK only. The site contains general information and resources for limited companies only in financial trouble. Insolvency Helpline only work with limited companies to offer solutions for their business debt problems. Insolvency Helpline cannot offer help or advice any other entity except limited companies. Insolvency Helpline does not advise individuals, sole traders or partnerships seeking debt advice. If you are an individual, sole trader or partnership seeking advice, we recommend using an alternative service.

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