If you are looking for an easy way to cease trading a limited company, the answer may be more complex than the actual procedure. Believe it or not, it is actually easier to form a limited company than it is to wind one up. The reason for this is because there are rules and regulations in place that will determine how it is that you go about winding up a company that is solvent and other procedures for winding up an insolvent business. In short, the easiest way to cease trading a limited company is to get help and advice from a licensed Insolvency Practitioner who can help you determine which method is best under your particular circumstances.
Contrary to popular belief, it is possible to make a voluntary decision to cease trading a limited company which is insolvent. The only major difference is that any profits realised from liquidating assets would be paid out to creditors before any ‘leftover proceeds’ could be distributed amongst shareholders. Generally this process is accomplished through what is called Creditors Voluntary Liquidation and a licensed IP would be appointed to oversee the liquidation process and report back to the court, creditors and shareholders. If the company is solvent, there are various ways in which to cease trading from simple striking-off (dissolution) to a Members Voluntary Liquidation.
Obviously, when a ltd. company ceases trading, all business is called to a halt. Creditors are paid, employees let go and the company is stricken off the books at Companies House. It literally ceases to exist as a legal entity. Any assets are sold and the proceeds will be distributed amongst the company’s shareholders according to the amount of shares they hold by percentage. Before the company can be stricken from the register, all taxes must be paid in full and the company cannot have traded for at least three months prior to petitioning for dissolution.
Taxes can be a bit tricky when trying to discover how to cease trading as a limited company because of the time element involved. A company will have a timeframe of nine months to pay up all their taxes but they cannot be dissolved until this happens. The confusion lies in the fact that a company must have ceased trading for a period of at least three months but all taxes must be paid first. Many companies apply to be stricken from the register after those three months but unfortunately, with some taxes unpaid, this cannot be accomplished. Here is why we suggest you get help and advice from a financial adviser or Insolvency Practitioner before winding up. You could save yourself, and your shareholders, unnecessary delays in the process.
When you seek advice from Real Business Rescue, we can help you sort though all the legal entanglements in which you may get snared. Ceasing trading ltd company sounds easier than it is, but we have an expert team on hand to help make the entire process as stress-free as possible. We offer a free, no-obligation consultation to help you gain a better understanding of your options. If you’ve made up your mind to cease trading, we know what it takes to make that happen.