Starting a new business can be exciting, but it can also be very frightening. The first year of business will generally make or break a business and a company owner needs to decide if they can carry on with their business or if they need to consider closing a limited company.
One of the first factors behind the decision to close a limited company is if the company has the ability to pay its bills. If the company still has the ability to pay its bills it is solvent. This means that company can be struck from the central registry of companies or a member’s voluntary liquidation can be commenced.
Striking a limited company from the Companies Registry is the most cost effective way of closing a limited company. If your plan is to have your company struck from the central registry then there are several requirements:
Employees of the company will need to be paid their final wages before the company winds up. It is up to the company to inform HM Revenue and Customs that the company is not conducting active business and that it will be dissolved. The PAYE and NI balances will need to be taken care of and the payroll scheme of the company needs to be closed off by HMRC.
When a company cannot meet its financial obligations, this means it is insolvent. Under these circumstances closing a limited company will be effected by making use of the voluntary liquidation process for creditors. The directors of the company have a legal responsibility to protect the interests of their creditors ahead of the interests of the company during insolvency.
If a company is forced into liquidation, it can apply to be placed into what is known as Company Voluntary Arrangement. If the company does not pay what is owed to its creditors then it could be forced to go into compulsory liquidation.
If a business does not want to close, they may turn to business rescue services. This is where companies seek special assistance and access free advice that can help them in their current situation. If a business cannot be salvaged then it may need to be closed, but most business owners want to take care of the process on their own, not by what a receiver tells them they must do.
Some companies can be rescued from certain closure by making use of the assets of their company with asset finance. There are certain companies that take care of these kinds of services to provide financial relief to companies and save them from dissolution.
Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 0800 157 7355 and you can also follow him on Google+
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