- If you have or feel you are soon about to seize trading
through your limited company
and you're wondering about your what next options,
then stay tuned.
In this video, we will cover keeping your company open,
active and repurposing it,
switching your company to dormant status,
putting your company into a solvent liquidation
and we've prepared a free PDF guide
for you to download, putting your company
into an insolvent liquidation
and finally, can you sell your business
and often overlooked option
when it comes to seizing trading.
So be sure to watch right to the end of this video.
Before I get into today's video,
be sure to hit that subscribe button
as well as the notification bell
to make sure you're kept up to date
with all of our latest content.
This really helps us to produce more helpful videos
and to get you free quality advice
from real qualified accountants.
So this might sound counterintuitive
but if you have seize trading then keeping your company open
and active is still an option.
Why and what for you may ask?
Well, it depends on your circumstances.
This option will only work for you if your company
is solvent and if you're not planning
on using your company for the same trading activity
that has just seized then you can repurpose your company
for a different trader activity.
For example, if you are a one-fee earning contractor
of your limited company, your contracts have ended
and you're not looking to go back into it,
then you decide you want to start a new e-commerce business
as soon as possible selling online through Amazon,
you can repurpose your existing company to do this.
So what exactly is dormant status for your limited company?
The company's house official definition is,
if it's had no significant transactions
in the financial year and significant transactions,
don't include filing fees paid to company's house,
penalties for late filing of accounts,
money paid for shares when the company was incorporated.
Otherwise any other transaction
could be considered significant.
And according to HMRC, your company is dormant
when you do not receive a notice to deliver
a company tax return or are not expected
to deliver a company tax return.
Remember you can only file dormant accounts
from the beginning of the next company year.
So let me explain this with an example.
If your company year end is the 31st of March
and you see is trading on the second or February
of the same year then you cannot simply declare
or make your company dormant from the 2nd of February.
Even if you do not trade between the 2nd of February
and the 31st of March but the company year to 31st of March,
you will have to file sufficient accounts
and a company tax return to both companies house and HMRC.
However, if by definition, your company remains dormant
in the next company year,
so the 1st of April to the 31st of March,
then your company can follow dormant accounts
to companies house and doesn't need
to file a company return to HMRC.
The advantages of placing your company in dormant status
is that are less filing and compliance requirements
and most likely fees as a result.
It keeps your company on ice if you like
and allows you to retain any assets,
both tangible and intangible such as the company name.
If you feel you no longer need your limited company
or just don't want it anymore then liquidation
is perhaps the most viable option.
Remember, you cannot just close your company
by filling in a form and walking away,
there is a process to it.
There are generally two options available
and informal voluntary strike off
and a Members' Voluntary Liquidation also known as an MBL.
The former is fairly straight forward
and is often suitable for companies
that have less than approximately 30,000 pounds
in distributable funds
while the latter is more involved in advisable
for companies that have at least 30,000 pounds
in retained distributable funds or assets
as a tax options are more favorable.
A members' voluntary liquidation has to be carried out
by licensed insolvency practitioners.
So it's not something you can tackle yourself.
Now with either of these options,
there is still a lot to consider for you.
We've put together a free helpful PDF to give you
an insight into solvent liquidation options
as well as some more information
about the associated taxes and how to get started.
Click on the link to head to our website
and download the guide for free.
An insolvent liquidation is far trickier.
By definition and insolvent liquidation means that
a company is closing because it cannot pay its bills
as they fall due or the value of the business assets
is less than its liabilities.
Now there's two broad scenarios here
either your company is forced into liquidation
by a creditor known as a compulsory liquidation
or you as a director instruct
what is known as a Creditors Voluntary Liquidation or CVL.
When your company is forced into a compulsory liquidation,
quite often affairs are tents annual costs
as a company owner will probably be higher
due to the legal action creditors will take.
We can only strongly recommend that you avoid
this route as best as you can.
If your creditors are starting to threaten
and turn up the heat with regards to the money
your company owes them then it's always best
to open a dialogue with them
and attempt to go down the CVL route.
Is this really an option?
Even if you're a one person directed employee
with no future revenue or profits
and what if your company has debts it cannot pay.
Well, in theory, yes, it is possible in any situation
to sell your business and company,
it all depends upon whether there is a willing buyer
who wants something your business has.
Now, let me clarify here that selling
your company entails a sale of all the share capital.
So in other words the business and company as a whole.
There is also a sale of assets
which is different from a sale of share capital.
So what is it a prospective buyer could actually want?
Well, for the most part prospective buyers
will want a profitable company with assets
and a future revenue profits stream
that's just traditional economics but not all buyers.
Some buyers may want other tangible intangible assets
your company has such as a client list
and the relationships, intellectual property,
a concept that they cannot copy easily,
a licensed to a product or distribution service
they cannot otherwise get
and even your company name could have value for someone,
the list goes on.
In reality, unfortunately,
not many limited company business owners
even explore this option.
And if you don't even try then who knows,
if this could have been a missed opportunity for you.
If you don't know where to start,
we partnered up with a reputable business broker
who can provide you with a free no obligation consultation
on whether your business is saleable
and if there could be any potential buyers for it.
I hope this video has helped you consider your options
if your business has come to the end of its journey
and taking you one step closer to knowing your numbers.
As always, let me know in the comments
your thoughts on today's video or if there are any topics
you'd like us to cover in the future.
Finally be sure to like and subscribe
as it really does help us to get our content out there.
This is Tony Dhanjal for the Accounting and Tax Academy.
Thanks for tuning.
(mellow music)