Unlike real people, it is perfectly legal to kill, or if you use the legal term, Liquidate, a Limited Liability Company.
A Limited Company in law is defined as “an artificial person” that is owned by shareholders and controlled by the directors.
When your Limited Company becomes a liability, and has outlived it’s usefulness, perhaps it will be necessary to take the sad but necessary step of ending it’s life.
If your company has few or no liabilities, then it may be possible to have the company dissolved by Companies House. The main problem with this is that the company can be brought back to life withing 20 years of the dissolution, for a variety of reasons, but usually because a creditor (HMRC) is owed money by the company.
If you want to kill the company off properly and have it buried six feet under, so that it is gone for good, then it is necessary to place the company into Liquidation.
The Liquidator deals with the winding up, then has the company dissolved, with no possibility of a return.
If the company has assets, the Liquidator will sell these assets and take his fee from the proceeds. If there are no assets, the fees can range quite dramatically, but a reasonable rule of thumb is the bigger the firm, the bigger the fee they require to cover the overheads of their posh offices in expensive city locations.
A Liquidator must hold an insolvency licence. The Liquidation process is identical for every company, whatever the size or age, the same rules apply. It’s so easy you would be amazed.
If the company was running a small business, then its usually a simple matter and the fee’s start at around £2,000 plus VAT.
The bigger the business, the bigger the fee is likely to be as all Liquidators generally charge on a time cost basis.
Running a business is hard, I should know i’m running three at the moment, as well as over a hundred currently in Liquidation!
Liquidation is so easy it shouldn’t be allowed.
So many people say to me, after placing their company into my hands as Liquidator, I wish I had done this a year ago, before I re-mortgaged my house or ramped up my creditor cards, only to lose that money too, and consequently, find myself in personal financial difficulty too.
The main purpose of limited Company is to act as a vehicle for a risky venture, to ring fence any losses from your personal estate. If you are having to fund the company from your own funds, you should seriously consider whether you are throwing good money after bad.
Starting a new company costs around £30, it can be done online, takes me about 15 minutes at www.stanleydavis.co.uk.
If you are a Director of a company that is in cash flow difficulties, you have to consider Liquidation as an option to save the business. It might not be the right one, but you you should establish all your options before making your decision as to how to take the business forward.