To dissolve a company, you a removing its name from the official register held at Companies House. This act of dissolution means that the company no longer legally exists. Whether your company has served its purpose, or never quite got off the ground, there is a myriad of reasons why you might need to close your company. Many business owners who are considering about dissolution may feel that they are alone in this struggle, but the truth is, there are many other owners who are in the same situation. Gov.uk data reports that there were 508,865 companies dissolved in 2018 to 2019 Whatever your reasons, we answer some of your most frequently asked questions surrounding company dissolution.
What is the Difference Between Company Dissolution and Liquidation?
Dissolution and liquidation are not the same thing. Dissolution is done so the company can be legally closed, especially is it has no present debt. If the company does have debt and liabilities, dissolution can still be carried out as long as the liabilities are settled completely within a year. On the other hand, liquidation is what owners can do if their business does not have the capacity to pay any liabilities. A company’s assets are taken and sold to get as many funds as possible which would be used to pay any debts and liabilities. However, it is important to understand that only a licensed practitioner of insolvency can do this and oversee everything on behalf of the company owner.
Can I Dissolve My Company?
In order to dissolve your company it must be:
- Solvent
- Not have traded, or sold stock, in the last three months
- Not have changed names in the last three month
- Not be threatened with insolvency proceedings
What Do You Need to Do Before Closing Down a Company?
A business owner needs to do some things first before pushing on with company dissolution. The list includes:
Inform HMRC
Informing HMRC and all parties involved of the decision of company dissolution. This should be completed within seven days of placing the application for dissolution with Companies House.
Distributing Assets
Making sure that all assets of the business are properly distributed among the company’s shareholders. Any assets that remain after dissolution are considered Bona Vacantia and become automatically owned by the Crown.
Paying All Employees Final Wages
You will also need to request HMRC close the company’s scheme for payroll.
Paying All Outstanding Liabilities
Including debts and tax. You also need to confirm the company’s capacity to pay off (or provide proof of) all outstanding debts.
Filing Accounts with HMRC
Filing the company tax return. Owners must state when filing that these are final since dissolution is planned. You should also request VAT deregistration.
Closing All Bank Accounts Under the Company Name
Record Keeping
published under Business Address Guides
