Closing down a Ltd. Company
Posted by: Top Cat on 18 April 2005
Hi folks.
I have a Ltd. Company which I wish to close down. I had a business partner who wanted out - there was no money or revenue in the company so she has basically passed the buck to me to sort it all out.
The company has no debts save for some outstanding accounting fees, but is no longer necessary and I'd like to do away with it. There are no tangible assets, and only one outstanding contract - a server lease, running to £75+VAT/month, with another two years to run.
What needs to be done? Can I do this myself, and save involving my accountant (and therefore additional fees - there's no money in the company to pay for much more, and having put a fair bit of my own cash into the company over the past few years I'm reluctant to put more in).
I'm starting a new venture and I would personally prefer to start this venture with a clean slate - a new Ltd. Co. (which might then qualify for startup assistance, etc.).
If I close the existing company down (which has made a loss for the past two years) am I doing the right thing, or is there any real benefit in keeping it alive to take advantage on any historical losses?
I know I should talk to my accountant, but I'd appreciate any advice anyhow.
John
I have a Ltd. Company which I wish to close down. I had a business partner who wanted out - there was no money or revenue in the company so she has basically passed the buck to me to sort it all out.
The company has no debts save for some outstanding accounting fees, but is no longer necessary and I'd like to do away with it. There are no tangible assets, and only one outstanding contract - a server lease, running to £75+VAT/month, with another two years to run.
What needs to be done? Can I do this myself, and save involving my accountant (and therefore additional fees - there's no money in the company to pay for much more, and having put a fair bit of my own cash into the company over the past few years I'm reluctant to put more in).
I'm starting a new venture and I would personally prefer to start this venture with a clean slate - a new Ltd. Co. (which might then qualify for startup assistance, etc.).
If I close the existing company down (which has made a loss for the past two years) am I doing the right thing, or is there any real benefit in keeping it alive to take advantage on any historical losses?
I know I should talk to my accountant, but I'd appreciate any advice anyhow.
John
John
A few thoughts and in no particular order.
Given that you are starting a new venture it would make sense talking to your accountant who should know you and your business and would therefore be better placed to give advice.
Having said that a few considerations.
Keeping company:
Unless there is a good reason otherwise I would seriously consider using the existing company for the new business. It already exists. Therefore no setup costs other than may be having to change the objects clause to carry on the new trade. However there will be the need to complete and file accounts/corporate tax return.
You say that the company has two outstanding liabilities which ought to be settled to avoid complication unless of course you do not wish to settle them - in which case you would need to go down the route of formal liquidation via a licensed insolvency practioner. Formal liquidation will be costly relative to the settlement of the two outstanding liabilities. It may even be that the server is still of use so why not carry on with it? And I am sure that your accountant would appreciate settlement of his bills
You also say that you have put money into the company - by running the new business through the existing company you will, if succesful, be able to draw these funds out of the business without personal tax consequence.
I should add that you may not be able to offset the previous losses against profits of the new business for Corporation Tax purposes - dependent upon the nature of the trades.
You say that there was a former business partner - did they have shares? Was a stock transfer form completed and stamped when she bailed out? You obviously do not want to have your former business partner having a legal stake in the business. Was she an officer of the company? Was a form 288b completed recording her resignation?
Getting rid of company:
If there are doubts or issues and you really need a clean break AND if you are satisfied that there are no claims against the company (this means coming to an arrangement with the leasing company and your accountant) then to avoid the cost of formal liquidation you could apply to Companies House to have the company struck off for the princley sum of £10. But I will reiterate that there should be no outstanding liabilities so you will have to either settle the accountants bill and the lease commitment or come to an arrangememnt with them.
If there is the likelihood of a claim against the company then the best advice is to contact a licensed insolvency practioner.
Start up assistance:
Not much I can say in this regard other than is a new company a requirement? This is a question for your accountant who will have a better handle on what is available in your neck of the woods. In my experience I have found grants etc to be a pain the backside to sort out.
One further question:
Is the company currently registered for VAT?
Hope this helps - give me a shout if you want any more input.
Regards
Mike
A few thoughts and in no particular order.
Given that you are starting a new venture it would make sense talking to your accountant who should know you and your business and would therefore be better placed to give advice.
Having said that a few considerations.
Keeping company:
Unless there is a good reason otherwise I would seriously consider using the existing company for the new business. It already exists. Therefore no setup costs other than may be having to change the objects clause to carry on the new trade. However there will be the need to complete and file accounts/corporate tax return.
You say that the company has two outstanding liabilities which ought to be settled to avoid complication unless of course you do not wish to settle them - in which case you would need to go down the route of formal liquidation via a licensed insolvency practioner. Formal liquidation will be costly relative to the settlement of the two outstanding liabilities. It may even be that the server is still of use so why not carry on with it? And I am sure that your accountant would appreciate settlement of his bills
You also say that you have put money into the company - by running the new business through the existing company you will, if succesful, be able to draw these funds out of the business without personal tax consequence.
I should add that you may not be able to offset the previous losses against profits of the new business for Corporation Tax purposes - dependent upon the nature of the trades.
You say that there was a former business partner - did they have shares? Was a stock transfer form completed and stamped when she bailed out? You obviously do not want to have your former business partner having a legal stake in the business. Was she an officer of the company? Was a form 288b completed recording her resignation?
Getting rid of company:
If there are doubts or issues and you really need a clean break AND if you are satisfied that there are no claims against the company (this means coming to an arrangement with the leasing company and your accountant) then to avoid the cost of formal liquidation you could apply to Companies House to have the company struck off for the princley sum of £10. But I will reiterate that there should be no outstanding liabilities so you will have to either settle the accountants bill and the lease commitment or come to an arrangememnt with them.
If there is the likelihood of a claim against the company then the best advice is to contact a licensed insolvency practioner.
Start up assistance:
Not much I can say in this regard other than is a new company a requirement? This is a question for your accountant who will have a better handle on what is available in your neck of the woods. In my experience I have found grants etc to be a pain the backside to sort out.
One further question:
Is the company currently registered for VAT?
Hope this helps - give me a shout if you want any more input.
Regards
Mike