{"id":1773,"date":"2022-08-09T16:12:37","date_gmt":"2022-08-09T16:12:37","guid":{"rendered":"https:\/\/www.unitedfinances.com\/blog\/?p=1773"},"modified":"2022-08-09T16:12:37","modified_gmt":"2022-08-09T16:12:37","slug":"when-is-the-right-time-to-close-your-company","status":"publish","type":"post","link":"https:\/\/www.unitedfinances.com\/blog\/when-is-the-right-time-to-close-your-company\/","title":{"rendered":"When is the right time to close your company?"},"content":{"rendered":"

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No director will ever want to admit failure and that their company needs to close. Every business owner wants to see their business thrive and enjoy success. However, naturally it doesn\u2019t always work that way, no matter how much we might want it to. Although it might seem a bit backwards, sometimes accepting your losses and closing your company at the right time, can be far more beneficial in the long run, than clinging on and hoping for the best. <\/span><\/p>\n

So, when is the right time? When should a business owner accept it\u2019s better off closing things down than continuing to keep going. <\/span><\/p>\n

The company owes more than it\u2019s worth<\/span><\/p>\n

If you\u2019ve got more money going out than coming in, then it\u2019s a business model that won\u2019t work. However, every business has its ups and downs and there are bound to be moments, when this is the case. However, if you find yourself in a position when all of the company\u2019s debts are greater than all of the company\u2019s worth, then it is classed as insolvent<\/span><\/a>. <\/span><\/p>\n

When you find the company in this position, it may be easy to think that you can simply trade your way out of trouble. However, if you\u2019re spending more money than your making, the business simply won\u2019t ever be able to trade its way out of trouble. At this point, it would be better to close the company<\/span><\/a>, get help and advice, rather than to carry on and simply rack up further debts.<\/span><\/p>\n

Creditor pressure getting on top of you<\/span><\/p>\n

If you don\u2019t have a lot of cashflow coming in, then it\u2019s likely that your creditors will be getting on your back. <\/span><\/p>\n

If you start receiving repayment reminders, county court judgements (CCJs) or even statutory demands from creditors, then it\u2019s definitely time to act. Creditors have every right to make these demands and can even send round bailiffs to try and get what they\u2019re owed. CCJs can also end up staying on your campy credit file for six months, making it all the harder to attain credit. If you find yourself in this position, it\u2019s crucial that you act quickly, whether that means being able to trade yourself out of trouble, or unfortunately having to shut the company down. <\/span><\/p>\n

The company realistically can\u2019t keep going<\/span><\/p>\n

Sometimes things just don\u2019t work out, it\u2019s as simple as that. This can happen to businesses all the time and it\u2019s not necessarily someone\u2019s fault, or mistake, things just don\u2019t work out. It could be down to financial pressures, a change in the marketplace, or even something happening within an owner\u2019s personal life.<\/span><\/p>\n

If it\u2019s not always down to financial pressures, and it\u2019s time for a businesses life to simply end naturally, it needs to close in a slightly different way. Sometimes an owner might be retiring and wants to maximise his retirement from the company, in cases like this a company would need to close via a Members Voluntary Liquidation (MVL).<\/span><\/p>\n

So how do I actually close my company?<\/span><\/p>\n

Primarily there are two main ways, and it will very much depend on the finances of the company and why you want to do it. If the company is solvent, you are looking to retire and the company has simply outlived it\u2019s natural life span, then a Members Voluntary Liquidation, is the way to move forward. This will allow you to withdraw all the profits you\u2019ve made from the company as it\u2019s sold and stripped of its assets.<\/span><\/p>\n

If the company is in financial distress and facing action from creditors, then the best option is a Creditors Voluntary Liquidation. This is a formal insolvency process which must be carried out by a licensed insolvency practitioner. Although there is a fee, the cost is paid before the creditors who are owed money and the practitioners fees are paid with whatever money is left remaining within the company. <\/span><\/p>\n

In summary <\/span><\/p>\n

Running a business is extremely hard work and sometimes it just simply doesn\u2019t work out. For whatever reason, the worst thing any business owner can do is ignore the problems they have, ignoring any problems will only lead to much more significant issues later down the line. Sometimes it is simply better to call an end to things, before things get any worse. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

No director will ever want to admit failure and that their company needs to close. Every business owner wants to see their business thrive and enjoy success. However, naturally it doesn\u2019t always work that way, no matter how much we might want it to. Although it might seem a bit backwards, sometimes accepting your losses … <\/p>\n

Continue reading “When is the right time to close your company?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/1773"}],"collection":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/comments?post=1773"}],"version-history":[{"count":1,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/1773\/revisions"}],"predecessor-version":[{"id":1774,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/1773\/revisions\/1774"}],"wp:attachment":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/media?parent=1773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/categories?post=1773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/tags?post=1773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}