Where to begin

First and foremost, you need to ensure that closing your business is the right decision. This might be extremely apparent from the outset, but if there is any doubt whatsoever, 1st Business Rescue will be able to assist. Any advice you receive will be tailored personally to you as a director and to your individual business needs. Understanding the impact to you personally from a financial perspective is crucial to the process, and our unique approach means we will advise you on this thoroughly.

Establishing you and your business’s position is the first stage in the process and one we will do in partnership with you. We’ll get a full picture of where you stand and will, therefore, be able to help you decide the best course of action. Closing a limited company can be somewhat complicated and 1st Business Rescue will guide you through every stage of the process to ensure it is done robustly and thoroughly. The options for your business include:

Business plan

Company restructure or restart

Closing the business might seem like the only option sometimes, but there might well be other avenues to explore, such as a restructure. This could enable you to carry on trading in a more profitable way and avoid permanent and complete closure. Alternatively, the business might be well-suited to a restart as a new limited company with a different trading name. The name could potentially be very similar but there are strict regulations to follow.

Insolvent businesses

If your business cannot pay its bills or its debts, then it is insolvent. It is also insolvent if the sum of the liabilities amounts to more than the sum of its assets. This often means the business will need to close and one of the ways to do this is via a Creditors’ Voluntary Liquidation (CVL). A CVL is a formal insolvency procedure where the directors choose to voluntarily close the business allowing them to keep as much control as possible. The business is able to appoint its own liquidator and a process is defined whereby the assets will be realised in order to make specified repayments to creditors. 

Solvent businesses

You may choose to close your business whilst it is still solvent; it does not need to be insolvent in order to close it. A solvent business is one which has the ability to repay any liabilities within a 12-month window. However, you will need to follow a different process and there are two main options depending on the company assets:

1. Striking off / dissolution
If your business is solvent, whilst you may not have much money in the business, you will have no debts to pay off to either HMRC, staff or suppliers. In this instance, striking off is likely the quickest and easiest way to close the company. It is possible to dissolve the company even if it has debts, but you will need to notify creditors who will then have a three-month period in which they can contest it. The business must not have traded for three months prior to the dissolution and once this happens, it will be removed from the Companies House register and will no longer exist.

2. Members’ Voluntary Liquidation (MVL)
This can be the most tax-efficient and financially viable way of closing a limited company if the sale of its assets can pay back creditors and leave a minimum of £25,000 for the shareholders. The process would see the assets being sold off and realised, with the funds generated used to repay the creditors in full. The leftover monies would then be distributed to the shareholders before the business is formally removed from Companies House.

Shareholders will also be able to take advantage of Entrepreneurs’ Relief (or Business Asset Disposal Relief) which offers certain tax advantages. Your accountant will be able to advise you on this more thoroughly.

Next steps

If you believe your business is at risk of closure, get in touch with the experts at 1st Business Rescue. We will be able to advise on the best course of action and you might find that there is an alternative which will keep your company alive. If closure is the best solution, we will help you to navigate this path in order to execute the process in the best way for you and your business. We are your trusted support that will be with you every step of the way.

Please get in touch and we’ll come back to you
without delay.

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