A step-by-step guide to closing a business

 Many people form a limited liability company in the hopes of making a fortune. Unfortunately, such success is not assured, and it may elude others, necessitating the company's closure.

If your company is no longer required, has no debts, and has ceased operations, shutting it down should be simple and straightforward.

In these circumstances, the business can be wound up by following the Companies House website's "voluntary strike-off and dissolution process" - click here for more information.

Before you begin the process of shutting down, be sure you have everything you need.

Prior to filing an application to close the business, several prerequisites must have been met. The following are crucial:

  • The company must not have traded or changed its name in the previous three months.
  • HMRC will require final accounts to closure of trade and any taxes to be settled, so you must have told them.
  • You'll also have to account for any surplus funds you plan to take out of the firm in the form of a salary, dividend, or capital distribution. If you're unsure, you should consult an accountant to guide you through the procedure and ensure that you've extracted the cash appropriately and in the most tax-efficient manner possible (for more information, go here).
  • If you have any creditors, you must notify them prior to filing the application, and you must send them a copy of the strike-off form within 7 days of filing it.

Fill out the form completely.

The directors must file an application to close or strike off the company using a form called a DS01. The form is simple to fill out and the content is self-explanatory.

Click here to get a print version of the form from the GOV.uk website.

There is a fee of £10 to pay for this.

It's less expensive to do it online.

You can fill out the form online by going to this link.

It's only £8 to file it online, and it's a lot easier to do.

Don't let your money go to waste.

If you don't terminate your business bank accounts before the company is struck off, the bank accounts will be frozen, and any funds in the account will pass to the Crown if you don't withdraw them before the company is closed down.

Timeframe

From the date of application, the strike-off process takes around two months. Companies House sets the timeline, and there are a number of stages that must be completed before the closure can take place. Companies House will take the following steps:

  • register the strike-off application on the company's public record
  • give you an acknowledgment as well as a notification to the company at its registered office address.
  • publish notice of the planned striking off in the Gazette so that any interested parties, such as HMRC if you have not filed accounts and tax returns or they are aware that tax is owed, can object if necessary.

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