There are a variety of reasons why you might want to close your limited business: retirement, returning to full-time employment, or simply changing from a limited company to a single trader. So, what are your choices, and how do you decide which is best for you?
Top tip: If you're making enough money but closing your limited business because of your tax obligations, our Crunch limited company accounting solution takes the worry out of accountancy and filing by decreasing both cost and time. Our award-winning software and service may be the solution to your issues!
If you've decided that shutting your limited company is the best decision for you, keep reading to understand how to close your limited business, what options you have, and what essential considerations you should make.
If you're closing a limited corporation, make sure all of your loose ends are tucked away first.
Whether you want to retire, change careers, or simply operate as a sole trader, your limited company must have all of its legal loose ends tied up.
This includes paying any outstanding bills, collecting any money owed by your clients, and ensuring that you can cover any operating costs incurred between now and the time your company is legally wound-up (for example, if you're paying an accountant to finalise your last batch of returns or hiring collection services to track down those late payers).
The good news is that you can count these as legitimate company expenses, lowering your total Corporation Tax bill.
VAT
If you're VAT registered, you'll need to fill out a VAT 7 form to notify HMRC of your desire to de-register.
HMRC will contact you with your deregistration date once this form is received. Until HMRC certifies your deregistration date, you must continue to account for VAT.
You must also file a final VAT return that includes items like remaining stock and any equipment your company owns.
Taxes on Corporations
You must notify HMRC that your business has ceased operations so that no further Corporation Tax notices are sent. Whether or not HMRC has previously requested that your company produce (i.e. submit) a company tax return will determine how you proceed.
Even if your business has already submitted a company tax return or received a 'demand to deliver a company tax return,' you must still file a company tax return online to demonstrate HMRC that your business is no longer active. HMRC guidance is available on the Gov.uk website.
PAYE (Pay As You Earn)
If you run a PAYE plan, you'll need to notify HMRC that it's no longer active and that it's time to shut it down. We'll close the scheme on your company's behalf if you're a Crunch customer.
If you aren't a Crunch customer, you should follow the HMRC's guidelines.
Gains in capital
If you work as a freelancer for a limited company, your equipment (laptop, etc.) is likely to be held by the company. You may have to pay Capital Gains Tax on corporate equipment if you personally acquire control of it when your company closes.
Accountants in Brentford help small businesses & startups with their accounting and taxation matters, bookkeeping to keep their business running perfectly.
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