If you are thinking of closing your company you have to make sure that you are well aware of all the necessary steps that are required to close the company. This blog contains information that you will need if you want to close your limited company.
You might be closing your business for the following reasons:
- You think that your business is not making much profit and you will be better off in running the business as a sole trader.
- Your business is not making profitable anymore and you want to start some other business altogether.
- You want to close your business because you are starting a full time employment.
Once you have decided to close your company, you have to consider whether your company is solvent or insolvent. If your company is solvent there are two option available to you:
Informal strike off
You have to make sure that you let everyone who have stake in the business know of your intentions. Pay all your outstanding bills. You should also make sure that you are on the same page with HMRC.
To strike off the company, the director of the company needs to inform the Company's house by filling in DS01 form. In this form the director will need to give information such as Company`s registration number, the details of the company`s directors and also provide a cheque of £10. After all the formalities by the company`s house You will have to wait for 3 months for your company to be struck off from the register.
Due to coronavirus the removal from the register is paused till 10 Sep 2020.
De Register from VAT
If your business is VAT registered, make sure that you inform HMRC that you no longer want to continue your business and fill in the form to de register the VAT. A de registration date will be given to you by HMRC and till that date you will account for all the VAT. Fill in the Final VAT return up to this date and submit it to HMRC.
Corporation Tax
You must make sure that all your corporation tax bills are paid. Get you final accounts made and fill in the corporation tax return and submit it to HMRC and companies house. If you want help in preparing your final accounts contact Taxaccolega at 020 8127 0728.
PAYE SCHEME
If you are using PAYE scheme for your employees you must inform HMRC that you are not using this scheme any more. Make sure that you have paid all the wages to your employees.
Distribution of the Profit
All the profits are distributed to the shareholders as dividends.
Members Voluntary Liquidation
This process is carried by an insolvency practitioner. In this process of liquidation the assets are sold and distributed to the shareholders as capital and not as divided. These distributions are taxed as capital gains and not dividends.
The tax implications that arise in each case will be discussed in the next blog.
Other options available to you are making the company dormant if you think you would want to continue your business in the future. In the mean time you have to fill in tax returns as nil. If you working as a sole trader in the meantime don't forget to fill in self-assessment tax return.
If always better seeking professional advice as there is no one solution which fits everyone. We at Taxaccolega analyse each situation and advise accordingly. So you can close your limited company in most tax efficient way. Please do not hesitate to contact us at 020 8127 0728 or drop us a message by visiting https://www.taxaccolega.co.uk/contact-us we will be very happy to help you. We provide accounting services at very reasonable rates. You can have a look at our packages https://www.taxaccolega.co.uk/about-us/fees.