Sometimes circumstances dictate a business must be closed down. Sometimes selling your business isn't possible if it relies too heavily on personal involvement or if it is performing badly. Various routes can be adopted for closure, such as an informal winding up or a statutory liquidation. Each method has differing legal and cost implications. Consider all the costs of closure, including employees' entitlement to redundancy pay.
Take professional tax advice from a qualified accountant before ceasing to trade, or closing down business. This will see your tax liabilities minimised and obtain maximum relief for any losses. A valuer may be needed if there are assets to dispose of. A solicitor and financial adviser will also be needed.
Business closure check list
- If business is a limited liability partnership or a company, Companies House will need to be notified. Their website has a useful guide to having your company removed from the register of companies.
- Even if not a company or partnership, VAT registration means you'll need to let HMRC know that trade will be ceasing. Detailed information on cancelling your VAT registration can be found on the HMRC web site.
- Having employees means obligations to safeguard their rights, finalise their pay and deductions, and issue their P45 form. If they have been in your employment for longer than 24 months, usually a redundancy package is offered. The DTI provides a useful on-line tool to help you calculate the number of weeks' redundancy pay due.
- The Information and Consultation of Employees (ICE) Regulations. These now apply to companies who have over 100 employees; as of April 2007. From April 2008 all businesses with 50 employees will need to apply the regulations. They give employees a statutory right to information about and consultation on employment developments, including redundancies.
Other people you will need to inform
- Creditors who may have a claim on any assets remaining in the business, these may include suppliers or customers.
- Customers - remember to thank them for their past business and collect any outstanding payments due to finalise your accounts for tax purposes.
Remember to close/cancel
- Contracts with suppliers
- Leases on premises or business equipment
- Rental agreements
- Telephones
- Utilities
- Bank accounts
