The Why And When Of Closing A Limited Company
Starting a business is tough. But closing up shop can be even tougher. But knowing when to throw in the towel will save further damage. Here are six signs that point to the end.
You Are Not Meeting Yearly Targets
After two to three years, it’s time to take your company’s financial temperature. If you’re still not turning a profit and you are out of or running out of money, it is time to re-evaluate the situation. Time to seriously consider cutting losses so you don’t wind up in financial trouble, worse than before. After all, the whole purpose of incorporating a limited liability is to keep business and personal finance separate. The last situation you want to be in is personally repaying a business loan that you can’t afford.
Your Personal Health Is Being Adversely Affected
If you find yourself losing health, whether through weight gain/loss, constant fatigue, or anxiety, you should evaluate whether the business is worth declining physical and mental health.
Losing Sight of Your Mission
Starting to forget why you started the business to begin with? This is definitely a sign that your company is heading toward the danger zone. It could mean one of two things, and both usually lead to the same unfortunate outcome.
First, your mission is unclear. If vital checkpoints like objectives and a clear customer are missing, you could be spinning your wheels, spending unnecessary money and still not feeling fulfilled. Or it could mean that you’ve lost your passion for The mission, one of the biggest propellers when times get tough. Without this drive, who or what else will push the business forward?
De-Syncing Customer Base
Are you providing a solution that customers are actually looking for? Or is your company centered around something you care about but others, not so much. If it’s the latter and you are not seeing positive feedback through positive monetary gains, it might be time to shut down.
Your MVP Employees Are Shifting Jobs
Don’t be the last one to know. When the team of experts that you built, starts to leave, you must ask yourself whether there is something they know that I don’t?
‘Sleep Mode’ is Not Possible
Sleep mode is a dormant status that allows you to slow down your business and resume it at a later date. Stagnate the businesses instead closing shop. You can completely strip your business down to its bare bones and wait for the market to bounce back. But there’s a catch, you need an alternative means of income for this to happen. If you are on the verge of having to close your doors and sleep mode is not a viable option, then it’s time to bid your company goodbye and move on.
Closing A Limited Company
The agreement of a company’s directors and shareholders is usually needed to close a limited company. The way you close a company depends on whether it can pay its bills or not.
Solvent: The Company Can Pay Its Bills
You can either:
- apply to get the company struck off the Register of Companies at HMRC or
- start a members’ voluntary liquidation
Striking off the company is usually the cheapest way to close it.
Insolvent: The Company Can Not Pay Its Bills
When a company is insolvent, the interests of its creditors legally come before those of the directors or shareholders.
Company Administration, Liquidation And Insolvency
Put your company into administration
You can put your company or limited liability partnership (LLP) into administration if it is in debt and cannot pay what it owes. You will be protected from legal action by creditors, and nobody can apply to wind up your company during administration. Administration can mean your company does not have to pay all its debts in full. Howe but your company can still be wound up.
Liquidate your limited company
You can choose to liquidate your limited company. The company will stop doing business and employing people. The company will not exist once it has been removed/struck off from the companies register at Companies House.
When you liquidate a company, its assets are used to pay off its debts. Any money left goes to shareholders. You will need a validation order to access your company bank account/s. If that money has not been shared between the shareholders by the time the company is removed from the register, it will go to the state. You will need to restore your company to claim back money after it has been removed from the register.
There are 3 types of liquidation:
- Creditors’ Voluntary Liquidation – your company cannot pay its debts and you involve your creditors when you liquidate it.
- Compulsory Liquidation – your company cannot pay its debts and you apply to the courts to liquidate it.
- Members’ Voluntary Liquidation – your company can pay its debts, but you want to close it yourself.
Your company may be forced into liquidation if it cannot pay its debts.
Dealing with your limited company’s debts
Your limited company can be liquidated if it cannot pay its debts. The creditors can apply to the court to get their debts paid.
They can do this by either:
- getting a court judgment
- making an official request for payment, called a statutory demand
How Can Lanop Help to Close Down Your Limited Company?
- Specialist Service
By partnering with us, you will ensure professional handling of the closure of your limited company correctly. We will help maintain your integrity as a director. - Protection of Your Assets
We will minimize the impact on company and personal assets as one of our priorities for the clients we work with. - Pre-emptive Plan for Creditor Actions
We take control of your limited company and deal with all creditors directly and professionally. - Taking Control
We guarantee to deal with your limited company closure comprehensively with our first-class service, expert chartered accountants and finance specialists, and in the quickest time possible. - Compliance
We will make sure that all actions in the proceedings of the closure comply with government regulation precisely. - Fixed Fees
We will close your limited company for a fixed fee with the best rates in the market. Get in touch today for a quote.
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