How do you close down a one person limited company?
Did you register as a limited company and are you now regretting the burden that comes with it? You’ve come to the right place, here we explain exactly how you close down or dissolve a limited company so you can continue working as self-employed.
How do you close a limited company?
As long as you don’t have any outstanding payments or debt, you can close down your limited company in two ways:
- Get the company struck off Companies House
- Start a members’ voluntary liquidation
Most people prefer to get the company struck off at Companies House as the process is easier. The legal term for this process is dissolution or striking off.
What do you need to do before closing your limited company?
For a voluntary dissolution to begin, your limited company must meet certain conditions. These are all things you should manage before closing your limited company:
First, make sure that your company is allowed to close down. This means:
- Don’t trade or change names in the 3 months before closing down your business
- Don’t get threatened with liquidation by your stakeholders
- Resolve any agreements with creditors, such as a Company Voluntary Arrangement (CVA)
Second, make sure that you inform everyone that you’re planning to close down your company:
- Announce your plans to interested parties and HM Revenue and Customs (HMRC). This includes sending a final statutory accounts and Company Tax return (e.g. your Profit and Loss and Balance Sheet)
- Deal with your business assets and accounts. This includes selling all your assets, closing any bank accounts, and transferring any domain names.
These points are very important as you are not allowed to close down your limited company if you haven’t done these things beforehand.
How do you close down you strike off your limited company with Companies house?
To apply to strike off your limited company, you must complete, sign, and send Companies House form DS01. You can do all of this online.
You should deal with any of the assets of the company before applying. For example, close any bank accounts and transfer any domain names.
How much does this cost?
It costs £10 to strike off a company with Companies House. You might incur some additional costs if you use an accountant for your final financial documents and accounts.
What happens after I close down my limited company?
After companies house confirms that you’re allowed to close down your company, it is published in the Gazette. This is the official record announcing that your company is getting closed down. This is a final check to see if anyone has objections to you closing down your company (for example a bank). There are 3 Gazettes:
- the London Gazette - for companies incorporated in England and Wales
- the Edinburgh Gazette - for companies incorporated in Scotland
- the Belfast Gazette - for companies incorporated in Northern Ireland
If there are no objections to strike off, the company will be struck off the register two months after it is published in the Gazette.
How does closing a company impact my tax return?
You need to do a final company tax return and account statement before you can close down your company. If this is done correctly then the only thing you need to add is any money you’ve made on closing down your company.
Can I continue working as Self Employed?
You can work as self-employed while you handle the process of closing down your company, but you have to be very careful that these two businesses do not overlap. What does this mean:
- You can’t use anything related to your limited company. This includes bank accounts, websites, and tools. These are owned by the limited company and not yourself.
- You cannot use your limited company to trade as you’d have to wait another three months before you are allowed to close it down.