The costs of a liquidation varies depending on the complexity of the case, and the extent of the work required to liquidate the company, however as a rough guide an insolvency practitioner will usually charge around £4000 to £7000 to liquidate a company. The costs of a liquation will usually be paid by the company if there are available funds, if not it will be taken from the sale of the companies assets, if this will not cover the costs, the Directors may be asked to settle the bill.
What do you get for your money?
The cost of the liquidation also reflects the level of service you will receive, so if you opt for a cheap deal you may find that later down the line things haven’t been dealt with as they should have been.
When getting costings from liquidators you should enquire what you will get for the fees above and beyond the actual liquidation. Some firms will offer more help than others and you should decide how much support you need, some will simply close your company while others will offer you more help which may help you in the long run particularly if you want to open another business.
How to reduce the costs
The costs of liquidation can be reduced if the Directors have undertaken all of the ground work needed before the actual liquidation.
There are certain actions that Directors can undertake in order to minimise the costs, they include:
Selling off stock
Completing existing projects
Winding down operations
Make staff redundant and pay staff what they are owed
Sell off assets
Sell premises or give notice on the lease
Give notice on all services, utilities and rates
Pay off debts
Resolve outstanding legal issues
Prepare business accounts to the date of the liquidation
Prepare PAYE and VAT to the date of the liquidation and agree outstanding liabilities with HMRC
If your liquidator is required to do any of the above tasks then the costs will increase. Liquidators usually charge by the hour in a similar way to accountants and solicitors, so if you require them to assist in any of the tasks, assign them tasks that you are unable to do yourself.
Getting professional advice
If you think Liquidation is the right process for you and your business then it is worth getting some advice from the professionals to ensure that you understand the consequences and that the process will suit your needs. Once decided you should shop around to ensure you not only get a good quote but you will also receive the care and support you need throughout the process.