Updated: 8th January 2021
Building up a business takes a lot of blood, sweat and tears, not to mention money! Working late nights and weekends and missing out on family or social occasions whilst constantly thinking about getting sales and managing your cash flow, can often feel like you’re fighting a losing battle.
Many businesses have cash flow issues at some point, but if your business is struggling and you’re constantly being chased by creditors, whether that’s your suppliers, the landlord or HMRC, then it may be time to take a step back and ask yourself whether your business is viable longer-term. It can be very difficult as a business owner to admit that your business no longer has a future. After so much hard work and sacrifice you want to see some reward for your efforts, but it’s important to recognise the warning signs and know when to take action and move on. If you don’t make the decision soon, then the situation may become even worse.
Sole traders are responsible for company debts, but as a director of a limited company, you too could become personally liable for company debts if you continue trading whilst insolvent and continue to add to those debts, knowing they may not be repaid. Creditors can also take action to try and recover their money by instructing a bailiff or even applying to have your company wound-up.
By making the decision yourself to cease trading, you are more in control of the situation. There are various options available to you and it’s important to get professional advice. One of the most common ways of closing a limited company is through a Creditors Voluntary Liquidation. The decision to enter a CVL is made by the company directors, rather than a compulsory liquidation being forced on them by a creditor. Providing that you’ve acted appropriately and not continued to increase company debt whilst insolvent, then the company debts will cease to exist once the company is wound-up, although you’ll still be liable for any personal guarantees so check any agreements you have. By winding-up a company in this way, you’ll no longer have the stress of trying to manage a struggling business, your company debts will have gone and you’ll be free to move on with your life.
There are other ways in which you can write off your company debts, restructure and even start a business afresh, so speak to an insolvency practitioner who will be able to advise you on all the options available to you. With 101 offices across the UK, you’re never far away from expert and confidential advice.
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