Running a company is not as easy as it may seem to be. There are several challenges that entrepreneurs feel every single day while handling business processes. And at times, when things do not work well, the question of shutting down the business may arise.
Closing a limited company might happen due to several reasons. If you are thinking about doing the same for your firm, getting help from a professional is prudent. Firms like JMC Accountancy and the likes in the UK can help you make the process easier.
But before that, let’s find out how you can close your limited company without paying extra tax.
Why should you think about closing your limited company?
Sometimes, your business will tell you it’s time to call it quits. Closing a business you’ve always dreamt of owning and worked so hard to build can be difficult. In most cases, you should let your head precedence over your heart.
Here are some signs that it is time to close a business:
- You are not able to make any profit;
- Your business products or services are totally out of date;
- You are having difficulties with the recruitment or retention of employees;
- Your health is not up-to-the-mark to be able to take care of your firm;
- And finally, when the limited company structure no longer works for you regarding taxes or administration.
Closing a limited company without bearing the brunt of taxes
Voluntary strike-off (also called ‘informal liquidation’ or ‘winding up’) is the process of requesting that a limited company be struck from the register of companies in the Companies House.
This process is also known as the dissolution of a company. To be eligible for the same, the company must not have traded, renamed, sold securities, or been involved in any other activity before three months of closing the company.
If an organization is in management, is susceptible to a scheme of arrangement or CVA, or has a supervisor designated over its property, it cannot be closed.
An MVA or a Members Voluntary Liquidation is a tax-effective way of closing a company and allowing shareholders to employ a liquidator to shut down a solvent business lawfully (i.e., a business that can still afford to pay its debts).
An MVL is among the most popular ways for directors of the company to recognize corporate resources, such as buildings, automobiles, funds, etc. The directors will initiate the liquidation process by contacting an Insolvency Professional.
Before closing your company through a voluntary strike-off, you need to ensure the following steps –
- Make employees redundant while ensuring that all relevant guidelines are enforced and that outstanding remuneration and holiday pay are correct Any payroll framework must be terminated, and HMRC must be notified that the company is no longer hiring people.
- Distribute company resources among shareholders.
- File final business tax returns with HMRC, stating that these are the final trading accounts and that the company will be dissolved soon.
- All due tax obligations (for example, Corporation Tax) must be paid in full.
- Any commercial bank accounts should be closed, and website domain names must be transferred.
Conclusion
After completing these initial steps, a request to Companies House can be made to remove the organization from the official register.
The board of directors must formally concede to close the corporation through a measure adopted at a board meeting or a documented board resolution. Once the formal decision is taken, Form DS01 must be filled out and finalized. Then, the Form has to be signed by most of the company’s directors and then submitted to Companies House.
To make the entire process of shutting down your limited company smooth and straightforward, getting in touch with an accounting firm like JMC Accountancy, or similar ones in the UK, can help you immensely.
