If you no longer want to operate your company, you may be able to close it via a process called company dissolution.
When a company is dissolved, it ceases to exist and is struck off from the register at Companies House. The company will no longer be able to trade with its customers and will be viewed, from a legal perspective, to have closed down.
Not every company can close via dissolution. In order to dissolve your company, it will need to stop trading for several months. You’ll also need to ensure that the company doesn’t have any debts, such as payments for products and services to suppliers or other creditors.
If you own a company that you want to dissolve, please contact us. Our experienced team can provide you with the advice you need to legally dissolve your company. You can also continue reading below to learn more about the company voluntary dissolution process.
The company dissolution process allows you to close down your debt-free company at a lower cost than insolvency procedures such as liquidation.
Company dissolution is often referred to as “striking off”. When a company closes down via the dissolution, it’s struck off from the register at Companies House and, from a legal perspective, no longer exists as a corporate entity.
In the UK, companies can close down via several different procedures. The most common are liquidation and dissolution.
In a liquidation, a company’s assets are liquidated, or sold off, in order to raise capital and pay the company’s creditors. The company liquidation process can be voluntary (a company closes on its own accord) or compulsory (typically via court action).
The liquidation process is typically used when a company has significant debts, such as to its suppliers or other creditors, such as a bank. Some companies may also be liquidated because of tax debts, such as VAT, PAYE or corporation tax arrears.
In general, if your company has significant debts and is under pressure from its creditors, the liquidation process may be your best option for closing it down.
Dissolution is a very different procedure. In order to dissolve a company, it needs to be free of debts, or be able to settle all of its liabilities within 12 months. It also can’t be under any type of legal pressure or debt agreement with its creditors, such as a CVA.
In general, if your company is free of debt and no longer actively trading, the dissolution process may be your best option for closing it down.
As we explained above, your business will need to have ceased trading for a minimum of three months, be debt free (or capable of paying creditors within 12 months), not subject to any legal action by its creditors and have a three-month trading history under its current name in order to close via dissolution. As a company director, you will also need to take several steps before you can close a company via dissolution:
You will also need to complete certain actions after you apply to dissolve the company, such as informing shareholders, creditors and other interested parties. Our team can advise you on the entire company dissolution process to ensure you’re compliant with all relevant laws.
If you no longer want to operate your company and believe that dissolution is the best option for closing it down, we’re here to help. As specialists in company closure, we can provide you with expert advice on the dissolution process and help you to successfully close your business.
Although dissolution is a simpler option than other procedures for closing down a company, it’s still important that you comply with all relevant laws to avoid action being taken by creditors.
To discuss your business’s situation and learn more about what you can do, contact us now on 0800 9717185 or send us an email to schedule your free private consultation.
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