These days starting a limited company is a straightforward and inexpensive process however winding a company up requires a lot more thought. There are several options available and the best way to close will depend on whether the company is solvent or insolvent.

If you are looking to wind up a company that is solvent and has assets over £25,000 then a Members Voluntary Liquidation (MVL) is usually the best way forward. An MVL should attract entrepreneur’s relief which means it is far more tax efficient than simply dissolve. If your company has under £25,000 of assets then the best option should be dissolution. The process can cost as little as £10 (any funds can usually be paid as a capital distribution which is usually better than dividends) and the strike-off can be completed in around 3 months.

If your limited company is unable to pay off its debts then you are obliged to cease trading otherwise the directors can become liable for the company’s debts. If you wish to close an insolvent company then a Creditors Voluntary Liquidation (CVL) is usually the best way to shut it down. An Insolvency Practitioner is appointed and will sell any assets and use the money to pay off creditors. Any remaining debts (this is usually the case) are then written off giving the directors a clean break. In addition all directors could be entitled to claim redundancy from the government’s National Insurance Fund. It may seem to good to be true but after paying the liquidators fees you could be left with over £10,000 to spend as you choose. At the Insolvency Helpline we work alongside experts in director redundancy and that’s why over 100 directors contact us every month!

If you are unsure how to close down your company and what method to use it is essential you get some professional advice – at the Insolvency Helpline all our advice is a free of charge. So, to find out the best way to close your company why not complete our Free 60 Second Test or call us on +4477 1566 4532.