Business life may require you to make a move like closing your limited company at times. The reasons vary, and they may be possible because of no profitability, change of mind, or termination of a contract or lease. It is especially not easy when you’re facing uncertainty. Luckily, there are steps you can take to effectively close a company. So read on, and discover the things we researched and you don’t have to.
Steps To Effectively Close a Limited Company
Seek Professional Help if Needed:
With all this big & complex process, professional advice may be important. You must consider seeking professional advice from an accountant, a solicitor, or a licensed insolvency practitioner to make you aware of all the important things to consider. They will guide you through every step, help you actively comply with tax and legal requirements, and may prevent any potential liability from arising in the process to close a limited company.
Personally Select the Right Way of Closing:
Two possible main ways exist to close a company. These are Members’ Voluntary Liquidation (MVL) or a Compulsory Liquidation. In members’ voluntary liquidation, you have more control, and this is the preferable way to go with if your company can pay off its debts. On the other hand, if your company cannot pay its debts, compulsory liquidation is the only option. Generally, MVL is preferred since it allows more control over the way of the closure process.
Update HMRC and Companies House:
After choosing the more appropriate method of closing your company (out of members’ voluntary liquidation or a compulsory liquidation), you must inform Companies House (which is the UK’s official registrar of companies), and HMRC (HM Revenue and Customs). This is doable by filling out forms that are relevant to the way (of two) company shuts down and the circumstances of the company. After you update these agencies, they’ll ask you to pay your outstanding debts, taxes and fulfill the rest of your responsibilities.
Conclude the Company and Distribute Assets:
Concluding a company means to fulfill all the duties like settling financial and legal matters, distributing its assets to pay its shareholders, and finally, closing the accounts. This whole procedure may take a while (usually months if complex issues exist). The distribution is made oftentimes by hiring a third-party liquidator to ensure assets’ fair distribution. The most important thing considered in the process is to pay the shares of shareholders before the distribution of assets.
Cancellation and Removal from the Register:
Having the company’s accounts closed, rightful assets distributed, and matters put to an end, you can apply to remove the company from the Companies House Register. Companies House will see if the required responsibilities have been fulfilled by the company before it approves the application. After this step, the company will perish, leaving you to decide if you want to open a new one.
Conclusion:
To close a limited company in the UK is a time-taking process. It also requires advanced planning with a strong awareness of all aspects of the company’s closure. Right closure method selection, involvement of government agencies, concluding the company’s matters, and finally, canceling it are the factors in the company’s closing process. With these steps taken, the process may smoothly achieve a successful outcome.
One bonus tip is to consult professional help to be aware of any possible liabilities from past businesses. This may help you structure the new business ideas. Be well-equipped with this knowledge to pave the path for a successful future in the entrepreneurship journey.
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